Watch List for the Week
With the markets trading just below Friday after-hours blocks, we start the week at all time highs. Speculation over the effects a government shut down have permeated the news over the weekend, so starting the week with a dose of caution makes sense.
The watch list is at the bottom of this post.
SPY blocks trading 280.38 Friday, after the market close, marks the overhead level to beat to start the trading session this morning. The blocks shown are only a portion of what traded after hours. 280.01 was heavily traded during regular session hours.
OPEX surely had some bearing on Friday block trades, so if we manage to get above them, we’d stay bullish short-term. If we stay below we will need to reassess during today’s session and assume a more cautious stance.
Pre-market trading for now, is oscillating above and below the aforementioned 280.38 level as we go to print. If SPY starts above this level today assume a bullish bias. We will watch market internals for any sign of a fade, with 280.01 blocks intact for now (pre-market).
The watch list covers several sectors that are in focus today. SPY would benefit from early strength in these industry groups.
We are watching consumer staples as its cycle turned up on Wednesday. Banks are also a beneficiary of capital flows for third week, as the financial sector (XLF) cycle turned up.
In order to get bearish, we need to see lower highs and lower lows, with TICK cumulative leading the way. Watch for weakness in JNK bonds as well. No weakness, no bearish trade.
Watch List and Thoughts for the Week Ahead
There are many stocks that are set to breakout. Retail stocks are on the watch list as well, as many traders have written off this industry group. Many of the retail stocks mentioned in the lower section are looking bullish.
We will start the week with a healthy portion of skepticism. Wait for the Opening Range and give the market a little time to trace out a direction.
Side note: money management or limiting the amount of capital we are willing to lose is also part of our strategy.
Good luck and Happy Monday,
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