Market review + Core position analysis (29/04-03/05 2024)
Last week's review 👉🏻Market review + Core position analysis (22/04-26/04 2024)
"The number of times I have made mistakes in stock trading is equal to the number of times I have been correct, which has led to the development of my career and personal wealth. The key is asymmetric leverage; earning more money when profitable than when losing, and always being able to gain returns. That's the Holy Grail!" (All trades are only to serve the profitability curve of your account, nothing more) - Mark Minervini
Quick review of the market this week:
$NASDAQ 100 Index (.NDX.US)$ Distribute on Tuesday, absorb chips on Friday;
$S&P 500 Index (.SPX.US)$ Distribute on Tuesday and Wednesday;
$Dow Jones Industrial Average (.DJI.US)$ Dividends distributed on Tuesday, diverged on Friday.
NDX>DJI>SPX
This week started with a decline for 4 days. After the APPL financial report on Thursday after hours and very good inflation data before the market on Friday, there was a significant gap up. However, despite such favorable external factors, SPX still failed to complete the Follow Through Day (FTD), and was almost completely blocked by the 50MA and the dense resistance zone above. From the perspective of trading psychology, this position provides a great advantage for traders to go short: the distance to the upper 50MA and the 'air pool' is very short, meaning the stop loss cost (risk) is minimal... These known objective advantages will influence the behavior of most market participants.
I will continue to patiently wait for the 'despair bottom (huge trading volume),' Shake out, Follow Through Day (FTD), and other similar reversal signals, because I believe traders' psychology has never changed since ancient times.
Weekly charts of NDX and SPX:
Just as analyzed last week, this week's large number of financial reports raised the overall trading volume. At first glance, it seems to be two accumulation weeks. However, if you carefully go back to the daily chart for observation, you will find that most of the gains come from upward gaps. These gaps are generated from non-trading hours in futures, stocks, where the volume is much lower than during trading hours. The daily chart also shows that the red candle trading volume this week still has a clear advantage.
In summary, it is undeniable that the bearish side still has advantages in terms of price, volume, and psychology at the same time.
In terms of market sentiment:
The Fear & Greed Index has started oscillating at the bottom, but has not yet reached the extreme fear range.
The proportion of bulls in the AAII has increased, continue to keep an eye on it.
Core holdings:
$CAVA Group (CAVA.US)$ Shortly after the opening on Friday, it broke through the recent highest volume red candle, possibly triggering potential Follow Through Day (FTD) due to the pre-market reaction to inflation data. Chose to buy around 5% in position, but at the close, observed insufficient trading volume, failure to achieve Follow Through Day (FTD), and although the closing price hit a new high, the RS line did not. Therefore, unconditionally chose to liquidate all positions.
$Constellation Energy (CEG.US)$ After breaking through shortly after the opening on Friday, bought around 5% in position. Although the trading volume was good at the close, both the closing price and RS line hit new highs, but Follow Through Day (FTD) was not achieved. Personally prefer to hold stocks when there is a favorable trend confirmation, so chose to liquidate completely first.
$Applovin (APP.US)$ Also broke through recent highs shortly after the opening on Friday, bought around 5%, but at the close, the trading volume was insufficient, naturally the RS line did not shine, chose to directly liquidate all positions.
$iShares Russell 2000 ETF (IWM.US)$ Short sold about 9% of the position at the close on Friday, with advantages of moving averages, dense trading areas, and gaps above. Small stop loss, holding without pressure, target profit: 4%-6%.
$Invesco QQQ Trust (QQQ.US)$ Short sell positions are still being held, original stop loss remains unchanged, holding relatively relaxed, target profit: 4%-6%.
Currently, the cash position is 76.47%.
"Adding to positions in hershey times, reducing positions in unfavorable times, trading the most in the best times, and trading the least in the worst times. That's how you make big winox and protect yourself from disasters." - Mark Minervini
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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