The market direction outlook from the weekend which you can review here was for the markets to continue under weakness. That meant that any weakness in the markets had to be taken as an opportunity for stock market trading trades. This could be any type of product but my favorite of course is the Spy Put Options trade or for some would prefer the Ultra Short ETFs like SDS or DXD, a chance to pick up shares.
For those investors interested in Stock Market Trading this morning, here is what you needed to watch this morning.
1) We know that according to the market direction technical indicators, the market direction is definitely under pressure. MACD did not even change from Thursday’s reading even though Friday had such a big jump. In my comments on Friday afternoon I indicated that the market direction jump appeared technical in nature.
A) At this morning shortly after 10:00 AM the DOW pushed higher and then the selling started.
B) The pullback fell right past today’s opening.
C) The first bottom from the selling took the Down just below the 14000 level again. Recalling how many times the DOW cannot hold 14000 and the next rally is important. it must push beyond point A.
D) It is unable to push beyond point A and in fact is choppy at best. The market then turns back and starts to sell more. If you want to own DXD you would buy it at around 11:30.
Dow Chart 1 minute Feb 25 2013 to 11:35 AM
This was a simple stock market trading trade and if wrong, there is no reason to expect the market direction to take off. Trading against the stock market direction is often straight forward and simple. Investors often read too much into this type of trade. Since the start of February the Dow has repeatedly had trouble with the 14000 level. It should be widely known to investors by now that the bias has moved to the downside.
MACD signaled a market down call almost at the start of February and each day it grown. Momentum has slowed and the pushes higher in market direction have not only continually failed, but been done on short-term catalysts and not on better fundamentals.
At 11:35 I once again entered my Spy Put Options Trade.
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