Indices Struggle at Critical Resistance
The market
experienced a fairly low activity day yesterday. And I expect
lackadaisical action in the market for the next couple of days. Not only
was the price movement minute, but the volume yesterday was also
miniscule.
And volume will remain depressed this week as traders avoid
increasing positions ahead of earnings season. The low volume will also
promote an inactive market and hinder the bull's ability to take the
indices beyond key resistance.
Eventually, I believe the market will make new highs, but as I
mentioned yesterday, I would prefer consolidation above 1301 this week. I
think the market is setting itself up for a colossal failure if it tries
to break out ahead of Q1 earnings.
But that will not stop us from trading. Not only are we sitting on
mighty gains, we closed down one position yesterday and added a new
bullish trade. Shares of TAN were closed down after I noted increased
selling pressure in solar stocks and $9 resistance for the etf was
formidable.
Solar is still a great industry, but I prefer to
have capital invested elsewhere, especially outside of etfs. In the long
term, I like Trina Solar (NYSE: TSL) Sunpower (Nasdaq: SPWRA) and GTSolar
(NYSE: SOLR).
One of the main reasons we took a bullish trade in an etf was the
market volatility had increased handily in March and we were stopped out
of every trade. While it pained me to report losses on stocks like IPXL
or AVL which eventually hit their targets weeks after our entry, traders
must be diligent with stops. Also, taking countermeasures, like etfs
which are less prone to violent whipsaw market activity, can help you
traverse a shifty market.
But for the time being, the market activity has normalized and
become slightly more predictable. So I bailed on the etf and nabbed a
microcap stock, which is already up 5% in a half a day. The bears
attacked the indices overseas last night. China raised rates again and
Japan also fell as a result of fish contamination in the seas of the
coast. Everything except treasuries and the dollar should pull back
slightly this morning, but ISM services at 10:00 could change the
direction. Either way, I still don’t expect much from today’s session and
continue to watch 1335 and 1301 for trend signals.
Watch List
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