Resistance at the 50 Day Moving Averages $SWKS $TRN $SLCA Drops
There are basically 2 main schools of thoughts in trading, technical & fundamental. I am of the schooling of technical. Interesting enough my daughter who works for a firm is more bent on fundamental. Regardless the key is to attempt to keep inevitable losses small. Currently the market is not healthy as the way I measure it technically. I am completely out of my longs and have one position which is short based the VIXY. There is currently resistance at the 50 day moving averages. The S&P 500 lost 0.2% after being up and down as much as 0.5% on the session. It tried to get above its 50-day line but failed to close above it. In a worse situation highlighting the inherent current weakness,the small-cap Russell 2000 slumped 0.9%. The index corrected as much as 11% from its July 1 high, more than double the declines of the Nasdaq and S&P 500. Again we have not had a double decline in such a long time. Traders who do not have a plan have been become complacent and have been rewarded to buy the dip.
At some point this will not work and will fail miserably.
Leading stocks have gotten hammered and does not seem to be a rotation at the moment.
Prior leaders such as Skyworks Solutions $SWKS, U.S. Silica $SLCA and Trinity Industries $TRN have cut their 50-day moving averages in big volume. This confirms more greater weakness…
Now is time to have a trading plan. Buy and hold is fine if you want to go through 50% draw downs as we have experienced not once…but twice in the last decade of the 2000s.