Echelon Insight: Weekend Report Vol. XXI

Market Overview

Past week was pretty uneventful with low volume all around going into Christmas and the fact that it was a half week.

Going into next week it’s probably going to be more of the same with Thursday half day and Friday closed the entire day for New Year. Nothing of significance to report on the market as it’s hard to see anything outside of a low volume consolidation for 3 more days.

Going forward patience and selective trading is advised, perhaps even take the week off and enjoy the end of 2020 with friends and family because low volume half weeks pose substantial threats to scalpers who thrive on catching momentum on near term expiries.

ES [S&P 500 FUTURES]

ES like previously mentioned is just consolidating between 3660 and 3700. If we were to break out or down it would be these levels we have to pay attention to.

If we break above the wedge at 37700 and hold then we are likely to go up, perhaps even a low volume squeeze due to no resistance. On the other hand we have below 3770 break and hold which would make us short term bearish.

Overall intraday it looks like a bullflag so leaning perhaps a couple percent more on the bullish side, but either way it’s as close to a stalemate as we can get.

NASDAQ 100

Same thing with Nasdaq, just a bit of consolidation at the top. With big tech earnings coming in January though this could be a nice run should we break the top.

That’s not to say that we think the earnings are going to be massively positive, nobody but insiders can say that for sure, but it’s rather the possible run up to earnings that lend to this theory.

US SECTORS

Not a pretty picture across the sectors, only things that showed even a modicum of strength all week were the technology and the financial sector.

The energy sector continues with its selloff and real estate is right next to it with the second poorest performance of the week.

Nothing much to say going into next week except for perhaps technology might continue with its strength to round up the year and maybe get ready for an earnings pump. 

STOCKS

VISA [V]

V is consolidating here near ATH.

Makes for a fairly easy trade one way or another. If it breaks the Chanel upwards and holds then this is a long, if it breaks down it can be shorted easily for the gap-fill and quite possibly to 190 where it becomes an even better pickup for a long.

BOEING [BA]

Massive dip buying impulse on BA at 200. The reason it’s on watch right now is because it is still trading in a downward intraday channel and if it pops one way or another it could make for a very nice impulse trade.

There were some concerning news over the weekend about a 737 Max Air Canada with engine problems so it might even open lower but if it remains in the channel watch for a pop or drop out of it to secure a position either way.

ALIBABA [BABA]

In my eyes this is nothing but a beautiful discount on BABA and choose to be greedy when others are fearful.

BABA is around 40% down from the highs due to a probe by the CCP, but if you’re looking for a longer term play this right here is it.

It could sell off in the meantime a little more of course, but with American retirement funds being heavy into BABA as well as the fact that BABA along with Ant and Tencent are the monopolies of China this is an opportunity I personally will not pass by and maintain a price target of 350 in a few years. On the technical side the gaps below are closed.

COLGATE – PALMOLIVE [CL]

Purely a technical play on this one, CL has been consolidating at ATH for quite a while now and is at the bottom/mid way of it’s consolidation range.

Whether it breaks out or down this is a very easy trade to get in on and profit. As a matter of fact if one is bullish on this ticker you could pick up a long exposure for 5-6 months down the road and hedge hard with weeklies if it breaks the bottom down.

MICRON TECHNOLOGY [MU]

As of writing this MU is posting a higher low above the previously tapped daily RBR. Should that level hold MU could be a trade back to the top again, and in the spirit of always being ready for anything, if it breaks down below 69.3 this could be a slight selloff to 65 and 62 respectively.

Intraday there is a level of supply around 71.3 – 71.8 but it has been tapped once already so it should only be played if MU posts a higher low there. Should MU trade into the 62 area in the future, depending on the broad market sentiment at the time, it could be a very nice entry for a long swing.

WEEKLY TRADING TIP: Find Your Own Niche.

It is very easy to get lost in the sea of online financial advice. It is easy to get lost in the sea of traders and struggle with who to trust and who to discard. So how do you determine who to listen to and who not to?

The answer is straightforward – Take in anything and everything, because knowledge in and of itself is very valuable, and then proceed to discard every single thing that does not suit you. 

Think of the stock market as the world (Because it is). In the world there are people who are naturally calm, relaxed, angry, hateful, spiteful, strong, weak, anxious etc…For someone who is naturally relaxed and calm a naturally intense person is like an enigma. Why? Why live through life like that? With all that intensity and seemingly anxious minute to minute existence. To the intense person however, the relaxed person may look like a lazy slob. So…What advice to these two have to take from each other to improve upon their strength? Virtually none. Same thing with trading. Are you anxious? Relaxed? Tolerant? Weak hands? Strong hands? Do you favour leaps? Swings? Scalps? Spreads? Options? Futures? Currencies? And on and on it goes. 

My advice is to stop wondering which method is the best…There is no such thing. There are only things that suit you personally, and don’t suit you personally. Focus on those. 

The result, then, is that more plentiful and better-quality goods are more easily produced if each person does one thing for which he is naturally suited, does it at the right time, and is released from having to do any of the others

– Plato, The Republic

BOOK OF THE WEEK: The Republic by Plato