Pretty much across the board, from domestic to international stocks, currencies, commodities and financial futures, we are seeing volatility return to the markets.\u00a0 Also, as we look at world markets, (and this is a gross generalization) most of the moves that have emerged over the 2 and a half trading days have been against the trends that were in force at the end of last week.\u00a0 As I read news articles, blogs and Twitter posts, it seems a lot of energy is being expended on trying to predict the future, with the typical handful of people making the usual dire predictions.\u00a0 The thing to keep in mind is that no one knows.\u00a0 As a short-term trader, I have always found this kind of speculation to be very counterproductive–at best it’s a drain of time and energy, at worst it creates opinions and biases that can be fatal to a daytrader.\u00a0 My advice would be to pretty much take it one day or one week at a time.<\/p>\n
In the case of stocks, we have very strong uptrends that are unlikely to turn on a dime, so, for swing traders, any weakness probably should be bought.\u00a0 These first countertrend moves should probably be seen in context of pullbacks, which will keep us from trying to pick tops.\u00a0 However, most indexes are overbought and overextended, so it’s also quite likely we’ll have a pullback with some potentially dramatic down days.\u00a0 As daytraders, we have to be very flexible in these types of market conditions.\u00a0 Be prepared to play both sides and just basically prepare yourself mentally for all possibilities during the day.\u00a0 Don’t be locked in to a higher timeframe scenario that blinds you from what is happening at the turns intraday.<\/p>\n
Yesterday was kind of interesting, as I said in my Waverly note this morning:<\/p>\n
Yesterday\u2019s moves in the Equities markets were large if taken in context of the prevailing low volatility levels, but it is impossible understand their true significant without a few more day\u2019s price action.\u00a0 Domestically, large caps held up dramatically better than small caps, but what we find intriguing is that we did not see money flows into traditionally defensive sectors.\u00a0 If the market \u201cbelieved\u201d that yesterday\u2019s weakness would have followthrough, we should have seen relative strength in these sectors.\u00a0 Instead, at the end of the day, we had slight outperformance in Utilities and some Healthcare names, but fairly widespread weakness in Staples\u2014this is not (yet?) the psychological backdrop of a soft market.<\/p><\/blockquote>\n
As we come in this morning, we are looking at Europe down significantly (Europe broad indexes down about 1.6% – 2.0%), with Asia more or less flat.\u00a0 Taiwan, which has been the strongest stock market in the world over the past several months, is down 4 standard deviations at -1.9%.\u00a0 Today’s price action could potentially change the big picture for domestic stocks, especially with the catalyst of the jobs numbers, but the 1256 level is the key inflection point to watch.\u00a0 Be careful of leaning too short as long as this level is holding.<\/p>\n
If the market rallies today, I would focus more attention on Energy stocks than I have in recent days.\u00a0 Also keep Industrials and Basic Materials on the radar.\u00a0 MOS earnings could potentially put some ags in play.\u00a0 Financials continue to be a mixed bag and I would tread cautiously there.\u00a0 If the market is weak, I will look to Financials and Tech first, but, as I said earlier, they key to a day like this is being flexible.<\/p>\n
Metals were very much in play yesterday.\u00a0 Here, the big picture is relevant:\u00a0 Silver has been the clear relative strength leader over the past 2 months, but the precious metals complex failed at the highs in late December.\u00a0 So far, the bulls have been unable to regain those highs and the complex may be setting up for a bigger break.\u00a0 Be on guard for a potential flush in Gold and Silver… don’t anticipate but do keep an eye on them intraday.<\/p>\n
In terms of currencies, the theme so far seems to be Euro weakness and Loonie strength, with the US Dollar getting a slight lift from the Euro.<\/p>\n
As I finish writing this, the SP’s have rallied strongly on the ADP number from the 1256 level.\u00a0 That probably is the line in the sand today, so plan accordingly.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Good morning traders, Pretty much across the board, from domestic to international stocks, currencies, commodities and financial futures, we are seeing volatility return to the markets.\u00a0 Also, as we look at world markets, (and this is a gross generalization) most of the moves that have emerged over the 2 and a half trading days have been against the trends that … Read More<\/a><\/p>\n","protected":false},"author":388,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[943],"tags":[],"class_list":["post-9106","post","type-post","status-publish","format-standard","hentry","category-adam-grimess-blogs","no-post-thumbnail"],"yoast_head":"\nMorning Thoughts 1\/5 | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/morning-thoughts-15-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Morning Thoughts 1\/5 | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Good morning traders, Pretty much across the board, from domestic to international stocks, currencies, commodities and financial futures, we are seeing volatility return to the markets.\u00a0 Also, as we look at world markets, (and this is a gross generalization) most of the moves that have emerged over the 2 and a half trading days have been against the trends that ... 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