Volatility to Start the Week
Last week we talked about the possibility of revisiting the recent lows due to volatility and fear. We also projected that this will dissipate and price action will eventually resume its upward path into the seasonally strongest months of the year. Breadth and institutional sentiment have improved, while stocks are temporarily extended.
Caution is Warranted – Volatility
Last week was a welcome respite after the 10% correction ran its course. We would issue a word of caution as volatility persists. Patience will reward those who wait. If you are of the mindset that we will retrace more of last week’s gains and find an opportunity for shorting lagging stocks that are trading below their 9/20ema, by all means, exploit the temporary weakness.
Institutions that bought big cap stocks last week will most likely look for similar opportunities in stocks that lagged the markets until now.
Watchlist and Volatility
We will wait for the “Opening Range” before doing anything today, as prudence trumps being too early. Therefore, we would wait before taking new positions.
Walmart reported earnings this morning and currently finds itself trading lower in the pre-market session. It is near support. We are looking for an opportunity to enter a swing position if buyers step up at this level. (98.00 +/-) Comps and eCommerce earnings grew 23%. We sense an opportunity as the company also increased its dividend for the 45th straight year. That isn’t a typo.
Patience will most likely reward us this week.
Sometimes stepping away from your trading desk and waiting for the right opportunity becomes the right thing to do.
Don’t trade if you are concerned. Giving back gains from last week is not an option
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