Good Morning,
I hope everyone had a great weekend, now let’s get set up for this week’s trading starting with the QQQ.The QQQ was up 0.78% on Friday to close at 364.02. we are still in a nasty downtrend closing below all the moving averages again in a dead cat bounce. The Bulls are all out again claiming price action looks good. I have been doing this for over 35 years and the problem I think we have here with all these BoobTube wannabe stock chartist is that they all have a bullish bias and are about to get slaughtered again. Yes, we are still in bounce mode from oversold conditions but that will ultimately lead to the next leg down. Smart, Nimble traders should lower their GTC buy limits as we could bounce back towards critical resistance above the 50 DMA of 374.14. but I do not believe we are going to even get close to that level, mainly because If you didn’t like the statistics and the history of the month of August then the Bulls need to look at the History and significance of the month of September since CNBC will not tell you util we’re down another 5%. The fact is here is such a thing as the September Effect.
What Is the September Effect?
The September effect refers to the historically weak stock market returns observed during the month of September. In fact, September has been the worst performing month, on average, going back nearly a century.
Yields are still too high to expect a significance rally in the equity markets and Inflation is starting to bump higher again. At these levels, inflation is very sticky so if you go long for the bounce, please make sure you use stops if you are long as well. The bulls have support at $359.82, $355.62, and $359.82. The markets have been able to blow off the old saying “Don’t Fight The Fed” the problem is as rates and inflation continue higher it will get harder and harder to achieve significant gains and “Don’t Fight The Fed” is getting harder and harder to deny the fact that it’s not juts a saying “Don’t Fight The Fed” However that saying would not made you any money this year in fact you would have lost money following that belief but Iy’s not over until that “Fat Lady Sings” (Btw I am not Fat Shaming) It’s just a saying.
Shorts should keep tight GTC stop li its or go to cash as we wait for the next sign of a downtrend which will become more apparent as we get closer to ultimate resistance levels near the Highs.
Current Swing Trades:
LONG QQQ PUTS ANd The SQQ
Short TSLA at $299 Long PUTS
Short NVDA at $480 Long PUTS
Have a great trading day, watch the chart and listen to price action and always respect what insides are doing.
Cheers,
G. Allan Collins
