It's Fed day, which means today is the day that the US Central Bank decides whether they will cut interest rates or leave them the same. My guess is that it is too soon to cut rates because the stock market is close to all-time highs and the unemployment rate is low, even though the economy is showing signs of weakening. If they do cut rates, I expect a massive rally in the North American stock markets, even if it is short-lived. In this situation. If they keep rates unchanged, the market could be disappointed and give back yesterdays gains and more. Yesterday was interesting because the rally was initiated on a Trump tweet that he was going to have an "extended meeting" with the Chinese President at the G20 Summit later this month. These tweets of course, amount to nothing but they still seem to drive the market. Anyway, the bottom line is that we should expect volatility today and expect quick trade positions to be whipsawed back and forth.
I also wanted to put up a few charts and discuss some stop-losses and selling options.
First I want to point out that the Nasdaq short trade (HQD) never materialized. it was undecided for a few days but Trump's tweet yesterday put it to bed. Anyone who bought that would have been stopped out for a small loss. There is a possibility that this could still rally depending on how the market views the rate decision but for now the pattern is invalidated.
ECO is a stock that I highlighted last week when it initially broke out. It has really taken off and is a little extended. Now is the point where traders need to think about their selling options. Typically, I would sell into this current strength and lock in some decent gains but another possibility is to set a breakeven stop-loss and let it ride. A third option would be to sell half and let the other half ride.
CIA is another stock that has been moving up nicely. It is not as extended as ECO but traders need to be thinking about what their "sell" plan is. As I have indicated on the main website, selling is far more important to investing success than buying, so just because you have a trade in the money, doesn't mean you are done. For now, I would let this one ride but would consider raising the stop to breakeven. Some traders would simply take their 12% and move on.
I also wanted to highlight this developing opportunity. I have a feeling that JWEL wants to resolve upwards but it could get whipsawed today. I would only buy it if it broke to new highs above the blue line. I would place the stop under the 50 dma.