TTP Trading has one of the most unique trading services available today as members have access to not one, but two traders, CJ Agresta of Trust The Process Trading and Greg Krupinski of GK Trading. Both traders use a similar methodology as swing to position traders as they look to capture shorter term swing gains with a portion of their trades while trying to capture longer trend following gains on the balance of their positions. TTP Trading has one of the most comprehensive services available as well. Aside from receiving real-time stock alerts, members receive thorough reviews each evening of the action in the major indices and detailed reviews of each open position. Additionally, members also receive a comprehensive weekend letter that includes a detailed chart review of the major indices in preparation for the coming week. Members also receive a 15-20 minute chart video each weekend highlighting new potential trading opportunities as well as a Morning Note laying out the Trading Plan for the day that includes any possible actionable trade ideas we are looking at. Greg runs a hypothetical $50,000 trading portfolio for intermediate traders who are looking to be more active, while CJ runs a smaller $25,000 hypothetical portfolio that newer traders with smaller accounts will be able to keep pace with. Go to http://www.ttptrading.com now to receive a 30 day free trial membership. See you there!
With earnings season kicking into full gear traders should be mindful of the reporting date of companies as they look for set ups. This can be very easy to overlook when going thru hundreds of charts a day, or more. It is our opinion, generally speaking, that swing/position traders should pass on trade set ups if the companies earnings report date is inside 10-14 days. Trading is difficult enough, don’t gamble. Even if you guess right on the earnings, the reaction to the news may be the exact opposite of what you would expect! CSX reported excellent earnings and raised guidance after reporting after the bell on 10/16. On 10/17 they received five analyst upgrades as well. The stock proceeded to lose 8% over the following four sessions.
MARKET GAUGE- Market In Correction
OVERVIEW: The early week rally in the indices gave traders hope that a corrective bottom may have been put in place, but a confirming follow thru day has been absent to this point. In fact, the last two trading days have been marked with distribution type behavior as the major indices fell or heavier trade versus the prior session or turned in a reversal day as they did on Friday. We have put in six trading sessions since the market bottomed on 10/11. The best follow thru signals have historically come on the 4th thru the 7th trading session after a possible bottom with the major indices registering large gains on a notable increase in volume, although many confirmation days of new uptrends have taken much more time to develop, so we will continue to be watchful for this signal. Again, follow thru days do not necessarily guarantee a new uptrend, or how long that uptrend will stay in place, but new bull market rallies rarely start without them. If the lows from 10/11 are undercut, all best are off and we begin anew. For now, cash is king and patience virtue as we wait for the market to signal the worst may be over. Finally with earning season kicking into high gear, the recent volatility may have just begun. We would be paying much more attention to how stocks react to the earnings, rather than what kind of earnings companies post. Now, let’s take our weekend look at the index charts as we start to prepare for the week ahead.
SPY- Although the index ETF finished flat for the week, Thursday and Fridays action saw the index give back early week gains on increasing volume. We don’t officially mark indices with distribution days once in a correction, but we would much rather see them pullback on lighter trade. The $280 resistance level that we have been highlighting did become an obstacle this week as the index took three swipes at the area coming up empty on each attempt. On a positive note, the index did hold the 200 day EMA after bumping up against that level twice late in the week. It remains a dangerous environment with the computer dominated algorithms accounting for the vast majority of the trading volume these days, so we likely have not seen the last of the big price swings.
NASDAQ- Tech stocks turned in relatively weaker performance with the Nasdaq Composite losing 0.64% for the week. With the index carrying the majority of high growth names during bull trends it stands to reason this index may turn in a worse performance when markets go into correction. Like the S&P 500, the index was unable to hold gains from early in the session on Friday, but while the 500 was able to hold a key moving average, the Composite finished below the 200 day EMA.
QQQ- The Nasdaq 100 lost 0.75% for the week and after rallying thru a key level near $175 earlier in the week the index was unable to hold on to it when the bell rang Friday. What stands out on the chart for the Q’s is the explosive volume levels the index has posted during this correction relative to its normal daily volume.
RUSSELL 2000- The pain continues in the small cap area as the IWM turned in the worst performance of the group on Friday losing just over 1%. I have widened the chart out just a bit this week going back to late summer of 2017 just before the index broke out to new highs. Here we can see that the longer term trendline that was established here was broken on 10/11. The index rallied back above that line early in the week, but was unable to hold on and closed back below that line by weeks end. What is a bit more concerning is how quickly the 50 day line is catching up to the 200 day line setting up a possible crossover in the moving averages that bulls would not like to see.
While I have been tasked for the majority of the year trying to find new ways to add value to the service, Greg has been a stalwart for the service providing members with a great example of how to follow a trading process. I know Greg doesn’t like to compare his returns to the S&P 500, or any other index, because he doesn’t want to just “beat an index”, like any other great trader he has an unlimited profit attitude. However, it has to be pointed out that even after a series of stops being taken out during this market correction, his return for the year is still running well above all other indices. One trade made this year in Teledoc (TDOC) provides a great example of process and patience with a touch of discretion sprinkled in.
On 3/1 Greg purchased shares in TDOC at $38.82. In keeping with the methodology, he captured swing gains of 14% on the initial move higher in only a few sessions closing out half of his position at $43.67. Almost immediately after locking in those gains the stock went into a two month consolidation and this is where Greg’s experience and discipline kicked in ultimately rewarding himself and members with one of the biggest winners of the year. In the vast majority of cases big advances take time to complete, and knowing this, Greg was able to trust his stop and exhibit great patience in letting this trade play out. Many traders would have given up on this trade as it pulled back to the entry level and opened profits disappeared. This patience paid of in early May as the stock broke out of that two month base marking the beginning of a five month trend higher before ultimately topping out a couple weeks ago near $90. We talk here often about selectively using some limited discretion, while at the same trying not to micromanage our trades, and on 6/13 Greg mixed in some of this discretion selling another portion of his shares into strength locking in a 55% gains on that lot. More trusting of his process and refusal to micromanage the remainder of his trade was exhibited in late July as the stock corrected by 16% cutting into more open profits. Continuing with his stop placed loosely near the 50 day MA and looking to lock down even bigger gains by following the strong trend, Greg let the rest of the trade play out and this patience added another 30% worth of gains to his remaining shares. In order to achieve these larger gains that really impact the bottom line traders have to give stocks some reasonable room to move, and although Greg gave back a portion of his gains before ultimately being stopped out, something that is unavoidable with trend trading, I’m sure he has zero regrets.
MARKET GAUGE- Market In Correction
OVERVIEW: Indices finally got their overdue bounce on Friday in what was a see-saw session however, we should not draw to many conclusions from Fridays action. Although it was good to see markets stabilize, many times traders are hesitant to go into a weekend short after such a precipitous decline, so it will be interesting to see if we get any follow buying on Monday when trading resumes. Traders should continue to honor what should already be tightened stops on existing long positions that are still working and continue to raise cash waiting for only the best opportunities. Traders should also be paying close attention to those stocks and industries groups that are acting relatively better than the others during times of turmoil. Stocks and sectors that had been strong leaders during the last bull move may not be the leaders of the next confirmed rally. My advice would be to turn off the TV and shut out all of the opinions and market analysis floating around and watch what individual stocks and the indices are telling you. Markets may continue to new highs after what appears to be a sharp correction, but are not obligated to do so. Many of the hard earned gains in the indices have melted away, in fact, the Russell 2000 is now virtually flat for the year after being up over 13% in August. Now let’s take our weekly look at the charts, where due to being in official correction territory, all distribution days are wiped away and we now are on watch for a new confirmed rally like the one we saw back in April that led to a nearly six month bull trend higher.
SPY- After knifing thru the 200 day EMA on Thursday the ETF was able to reclaim the level with a 1.39% rally on Friday. We will be watching the summer breakout area near $280 to provide some potential resistance on any move higher. Traders should be prepared for excessive volatility like we saw back in the February-April period after markets corrected.
NASDAQ- The Nasdaq Composite was able to pull off the same trick Friday with a 2.29% rally. The index was able to attract some buyers as it cut thru the May 2018 consolidation area that proceeded a breakout that led to all-time highs. We will be watching this area for further support on subsequent declines.
QQQ- Its pretty much the same look for the Nasdaq 100 with possible support near the prior breakout area near $170. The index was the best performer on Friday jumping 2.78% closing well above the 200 day EMA.
IWM- The small caps continue to be the worst performer of the group as the index is now flat for the year after having been up over 13% in late August after reaching all-time highs. We have to go back to the November 2017 breakout area near $150 to find the next line of meaningful support. The index is now nearly 5% below its 200 day EMA. We had been warning here of the excessive build up in distribution days in the index well before the large decline.
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MARKET GAUGE- Uptrend Under Pressure
- Tighten Stops
- Slow Trading Activity
- Lower Risk
OVERVIEW: The technical breakdown in the indices that began on Thursday continued on Friday with the tech sector again taking the brunt of the selling. The only good news was that volume receded somewhat from Thursdays turnover, but this is not much solace as plenty of distribution days can be found, particularly in the small cap and tech area. The Russell 2000 and S&P 500 ETF have come down to some possible support areas, but caution remains the word of the day as some of the underpinnings in the market continue to flash some warning signs including a narrowing of market leadership, as evidenced by the contraction of new highs versus new lows, recent mounting distribution and the breaking of the 50 day lines. We don’t know what kind of correction may be in store, or if another quick buy the dip turn around in this bull market is in store, but the lowering of risk at the present is supported by what we have been seeing in the indices and individual leading stocks. Let’s take our weekly look a the index charts to gain some perspective.
SPY- The ETF we use here to track the S&P 500 has definitely behaved better than the Nasdaq and Russell 2000, but it also has finally succumbed to the selling pressure. While still in a longer term uptrend, evidenced by the pretty channel the ETF has carved out, this weeks late selling has quickly brought the ETF down to an area of bi-lateral support at the 50 day EMA as well as the previous breakout support level near 286. If this area on the chart does not hold up, we can look to the six month uptrend line as the next area of support. Beyond this, the July breakout area around $280 could be the next line of defense and this would represent just about a 5% decline from the September all-time high. While this is not a large correction in the general scheme of things, a lot of damage can be done to a traders account in the interim if one is not managing the current market risks properly.
NASDAQ- The Nasdaq Composite broke a tri-lateral area of support on Thursday on extremely heavy turnover and that selling followed thru on Friday with the index losing an additional 1.16%. We now have seven distribution days on the books for the index which is more than enough over the last 25 sessions, when coupled with the aforementioned technical violations, to warrant caution. The index reached a 5% correction from the September high during Fridays session and we can now look to 7640 as the next area of possible support should the index continue its decline. Look for the 50 day EMA and the shaded area near 7950 to provide some possible resistance on any rally attempt. The tech area continues to be a high risk area of the market heading into next week, even on a snap back rally, so we suggest continued caution and some patience here before getting too involved.
QQQ- The Nasdaq 100s violation of support was similar to that of the Composite, but it was the only index to rack up a distribution day on Friday as volume continues to swell. We have not seen back to back volume days of this magnitude here since February of this year when the index had bottomed and distribution days now sit at an elevated level of eight over the last 25 session period. We can look to the 175-176 area as the next line of possible support and the 182-183 area shade on the chart as possible resistance on any advance.
IWM- The Russell 2000 ETFs decline was well out in front of the other indices, just as it was on the breakout to new highs back in the spring. The decline here from the top in late August is now over 7% but the possible good news here is that index caught at a bi-lateral area of support Friday afternoon at the 200 day EMA as well as the previous breakout level back in May near $160. This spot may provide the impetus for a sharp snap back rally early next week, but beyond that things are still in question as the index has accumulated a whopping 10 distribution days since the calendar hit September.
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MARKET GAUGE: Confirmed Uptrend
OVERVIEW: We now move into October with the end of the quarter and quarterly options expiration behind us, and thus, I think we may get a clearer picture of where the indices are headed without any artificial underpinnings. While we had some intra-day volatility, there was not a dramatic change in index prices for the week. The Nasdaq 100 led the pack in performance, while the Russell 2000 brought up the rear. With the Nasdaq Composite closing back above its prior breakout level and the S&P 500 continuing its steady trend higher with little signs of distribution, we have removed the cautionary note we have been carrying within Market Gauge. However, we should still note that the small cap area and the Nasdaq Composite itself still carry enough distribution days over the last 20 sessions or so to warrant our attention. Now, let’s take our weekly look at the four indices we track here as we head into the fourth quarter.
SPY- The S&P 500 ETF that we like to use here to track the index continues to carve out a beautiful up trending channel that dates back to late spring. Distribution days are still contained to a manageable three over the last 25 sessions and the index seems fairly immune to all the trade and tariff news if you take a step back and simply look at the chart. I will keep the commentary brief here because I think the picture accurately tells the story for this index.
NASDAQ- The Nasdaq Composite violated its August breakout in early September and had been playing ping pong with that support/resistance area since. It was able to withstand another test of this area this past Monday and rebounded to finish above that level for the week. We closed the week above the 50 day EMA, trend and the aforementioned breakout support, but we do have six distribution days on the books if we count the option expiration session on 9/21. What bulls would like to see is a definitive move away from these support levels climbing back higher into the up trending channel.
QQQ- The 100 had a good week moving up by 1.13% and it too reclaimed the prior August breakout level. Like the Composite it also sits above the 50 day EMA, but has not been able to climb back into the six month channel. After a flurry of distribution days to start the month of September which led to the failure of the August breakout, distribution days have become scarce. It would be nice to see the index climb back above the longer term trendline however, we do put more emphasis on horizontal and moving average support and the index looks good in this regard.
IWM- The small caps have been the main area of concern recently for the markets. An August breakout failed to gain much traction and after three weeks of testing that breakout support near $170 the index gave way this week violating all three areas of support. We alerted members this week to not get aggressive on the short side of this index just yet. We feel that end of the quarter option hedging may have had something to do with the recent weakness and the risk of a near term fading of this breakdown is a possibility. Fridays action was a positive for the index as it out performed its peers. We would like to see how this index begins the new quarter this week before drawing too many conclusions. Like the Nasdaq, we do have six distribution days on the books when accounting for the options expiration day, although we must take this day in context.
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MARKET GAUGE: Confirmed Uptrend, Caution Still Warranted
OVERVIEW: It was a busy week with option expiration and index rebalancing adding to normal volume levels, but in the end we ended up with only a modest week to the downside for the four main indices we track here. However, the blue chip stocks separated themselves from the pack this week with the Dow Jones gaining 2%. In the short term we have a bit of a split market with large cap stocks picking up steam while small caps and some techs running in place. These areas have been able to hang around and hold some key technical areas but have not been able to pull away, while in the meantime, the S&P 500 continues its methodical march higher. Some distribution days were registered across the indices on Friday, but as I always preach, we must take things in context. The options expiration and index rebalancing greatly effected the normal volume flow, so while we won’t totally ignore the selling on Friday we will greatly discount it in in the larger scope and I have shaded the arrow in the volume pane in pink to highlight this event. You can see that our Market Gauge is still in confirmed uptrend mode, but I still feel some caution is warranted in our trading activities. This means having a bit more patience in waiting for quality set ups, and perhaps keeping a bit more cash on hand in your account. Now, let’s take a look at the index charts and see where we are heading into next week.
SPY- This area continues to act better than its counterparts as the slow and steady uptrend from the confirmed rally that began in the spring continues to unfold. The two prior breakout levels that were tested in the summer have held and the index has not threatened its 50 day EMA for nearly three months. Distribution days have been scarce for the ETF with only two in the books discounting Fridays inflated volume figure, so there are no present concerns in this regard. I will remind you again however, that a sharp correction in the markets do not have to announce themselves in the form of mounting distribution days, so always honor you stops and trade responsibly. Traders should be prepared for a pullback should the ETF rally into the upper end of the channel.
NASDAQ- The Nasdaq Composite successfully tested a three month trendline early in the week, reclaimed its August breakout level on Thursday with a nice rally and was able to close above that level to end the week despite the 0.51% loss on Friday. I have redrawn the trendlines this week shortening up the timeframe a bit which may show the very slightest appearance of a possible rising wedge formation. Remember however, as much as trendlines can be a great aid in technical analysis, we feel that horizontal support, the 50 day EMA and the tracking of distribution days hold the most weight with our index analysis. We can see here that we have four distribution days on the books discounting Fridays inflated figure, shy of the 5-7 days over the course of 20-25 sessions that would raise caution flags for us.
QQQ- For the Nasdaq 100 we have left the longer term trendlines in place to show the resistance that has formed on the underneath of the nearly five month up trending channel. The index was able to reclaim the August breakout this week, but we do have five distribution days, plus the contextual day of selling Friday, spanning only the last 14 sessions. Another distribution day early next week would start to raise some caution flags for the 100.
IWM- The small cap Russell 2000 has been trying hard to hold the key $170 level which marks the point of the August breakout, but just hasn’t been able to pull away, and the more time it spends hugging and testing that support the more precarious the situation will get. We can see a huge spike in volume from the index rebalancing on Friday and we have four distribution days in the count for the month of September with one week to go. Should the $170 area give way we will be watching to see if the 50 day EMA, which sits close below, contains the selling.
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