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- The best thing that most investors could have done was go to cash positions in their retirement accounts as the 200-day SMA failed in late 2015. This helped me avoid a correction in my biggest account.
- With the speed, chop, and volatility so far in 2016, the traders that are making money are likely day trading or holding positions for a few days at a time.
- This market has many conflicting signals. This makes it difficult for swing traders and trend traders to catch any sustained move before giving back their profits.
- For the past 52 weeks, $SPY is down -8.56%, $DIA is down -9.1%, $QQQ is down -5.63%, and $IWM is down -17.17%. The stock market as a whole hasn’t been accumulated in over a year. $SPY is at the same price level as it was in late October of 2014. The stock market as an asset class is being traded and not accumulated.
- 2015’s favorite growth stocks, FANG, have seen profit taking in 2016: Facebook up -.09%, Amazon down -20.86%, Netflix down -21.99%, and Google -7.18%. The 2016 correction has brought down some of the strongest stocks.
- Consumer staples ETF $XLU is up +.69% year to date and the Utilities ETF $XLU is up +6.75% YTD. The $GLD ETF is up +15.89% YTD and $SLV is up 10.99% YTD. This shows the defensive nature of the stock market, with lots of risk off trades in 2016.
- Speculative stocks like $YELP, $TWTR, $LNKD, and $GPRO are all down dramatically over the past 52 weeks. This demonstrates that the bubble phase of the Dotcom 2.0 has already passed as earnings expectations are not met.
- The moves up in $SPY continue to be on lower volume which show a lack of accumulation for a sustained uptrend.
- It is crucial to trade smaller than usual in this market to account for the expanded average trading ranges.
- The best strategy is to create good short term risk/reward ratio trades at key overbought and oversold levels, because there is not much of a trend to catch before it changes.