Posts

Trading Journal - FOMOing in Stocks (06.09.20)

avatar of @mawit07
25
@mawit07
·
·
0 views
·
2 min read

Although today was a down day for SPY I was somewhat disappointed as it was not even down 1%. Tech stocks fared much better as FANG was heavily bought and demand still high. In a FOMO market it is likely not going to be this easy for the market to simple start crashing. As a matter of fact many of these small drops in the daily has not only been bought but prices have extended to the upside during this market rise since April.

Front post chart is a sanity check to the reality of the economy. Although prices have risen and continue to rise the reality is a lot of companies are not having much of any profit in their business. So since the evaluations are still high people have came up with reasons as to why they are valid. Fed providing support to the markets, retail traders are buying up the market in high demand, or since 2012 multiple quarters earnings from companies have been negative or flat. Growth have been slower prior to 2020 and global shutdown.

At this point in time reality for markets is that price is leaning bullish and demand for stocks is still FOMOing. If that is such a word? The tech sector is still leading as it had been since the March lows so from stock price standpoint still bullish. I personally would not straight out buy here on anything without hedging or putting a leash on to what I am trading. The February drop came out of no where hence what is to say it can not happen again?

This post may sound like I am flip-flopping as I am pessimistic on the market but also admitting its a bull market. Well when we stretch the SPY on a weekly time frame and look at it across a 20 year span we have the following:

The reality is price is rising but the momentum to the upside is dwindling. This was happening even prior to the Feburary/March crash. Yet prices seem to be in a open microphone and extending closer to the top of the band. There is still potential upside to this market for weeks or even months. Heck the demand could such as RSI can rise from here breaking out of its negative divergence. Anything is possible. What currently is interesting with this chart is that even though RSI is diverging it is currently on a rise so momentum is on bulls side. I would not be shorting this market or trying to pick a top as it is obvious even in a twenty year chart that SPY looks to have continue follow thru for the bulls.

Posted Using LeoFinance