Looking at the leaders of the market…actually, still leading. Check $AAPL $AMZN $NVDA $FB $TSLA $MSFT. Nothing wrong with the prevailing uptrends. (September 04, 2020)AAPL FB AMZN NVDA NFLX GOOO GOOGL AAPL AMZN NVDA MSFT
I want to look at the various FANG stocks; my contention is, I think the market got a lot of damage on Wednesday even through today, Friday. But the strong recovery tells me a couple of things. First of all, we got a lot of pain in these stocks. Remember, every share that was sold here on the way down, somebody bought it and they are all underwater here. So if we get more buying to push this higher I really expect there to be some selling, some liquidation.
Is this institutions selling their shares? Frankly, it’s kind of hard for me to imagine that institutions are ditching their Apple ( NASDAQ: AAPL ), I just don’t think so. I think that ultimately the market goes higher. But for a short-term swing trade, there is probably a little bit more to the upside. I would just be really, really careful about expecting stocks to do this; it could happen but I kind of doubt it. But it could, it could happen, so there are no predictions here.
I am just saying, the way that I am trading this, I liquidated a lot of positions yesterday and I didn’t really add much back today, a little bit of Apple ( NASDAQ: AAPL ) right towards the end of the day. But other than that I am kind of sitting kind of fat and happy in cash as opposed to fat and happy in stocks, but either way, fat and happy. I am looking for a little more upside here and I am actually looking for the uptrend to continue simply because on this weekly chart I have no signs that it is going to discontinue. I see nothing but stronger trends in the upward direction.
If we look at Facebook ( NASDAQ: FB ); this didn’t really take that much of a hit, not like so many other stocks did, so Facebook ( NASDAQ: FB ) is still intact. So Apple ( NASDAQ: AAPL ), Facebook ( NASDAQ: FB ) Amazon ( NASDAQ: AMZN ); Amazon ( NASDAQ: AMZN ) tagged the 50, that hardly ever happens, this was a buying opportunity here. NVIDIA ( NASDAQ: NVDA ). NVIDIA ( NASDAQ: NVDA ) came down and did not even come close to tagging the 50-day moving average. But for sure if you look at this, prior resistance here, prior resistance here is support here. After the stock breaks through it comes back down, boom! So that’s your new support level here. You’re buying this stock now and you’re keeping a stop there, maybe you want to give it a little more room below the 50.
The point is, to be sitting here and fretting about the market going lower and about your stocks going lower, at least on the ones I’m talking about, they are actually still in uptrends, longer-term secular uptrends. You have to understand that and if you do that’s going to keep you from getting shaken out and then a week from now or 2 weeks from now going; “Oh crap, what did I do? How come I got out and now the market is moving higher?”
The point that I am making is this; I am not pounding the table saying, “Stay in stocks.” But I am also not pounding the table saying, “Get out of stocks.” What I am doing is, I am gently tapping the table saying, “Do you have a process? Do you have an investing process? Do you have a swing trading process?” Because if you don’t you are all over the map and this is one of those instances where swing traders are taking a lot of action, making a lot of moves here and there. While, at the same time investors are saying, “Hey man, my moving averages are intact, I’m good.”
You look at Google ( NASDAQ: GOOGL ), a pullback to the 50. Apple ( NASDAQ: AAPL ), a pullback not even to the 50. Amazon ( NASDAQ: AMZN ), thank the good Lord, there’s a gift. NVIDIA ( NASDAQ: NVDA ), not even hitting the 50. Microsoft ( NASDAQ: MSFT ), thank you, there’s a gift.
Investors look at this stuff as maybe the market gets their attention a little bit more but none of their rules are violated, there is literally nothing to be doing. So decide what your time frame is going to be and then do this: If you have your plan intact when you buy a stock none of this volatility should bother you; because you have already factored in the worst-case scenario on your specific trade, that’s your stop and your size. And if the worst-case scenario starts happening more and more with your trading then you need to say, “Well, maybe this isn’t the market for me.” And then you just withdraw and wait for a better market, okay?