The Trader Daily

 | Jul 22, 2014 | 7:36 AM EDT  | Comments
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Stock quotes in this article:

IWM

,

spy

,

wmt

,

twtr

,

nflx

,

cmg

To be blunt, aside from day timeframe index traders chasing the flickering ticks every minute of every day, there simply isn't all that much worth doing at the moment. So sometimes, the best course of action is no action at all. Aside from the iShares Russell 2000 ETF (IWM), which remains in a short-term downtrend, the major market ETFs are trading sideways, albeit with a slight upside bias.

For the higher timeframe participant, identifying the longer-term trend in the major indices isn't rocket science. One need not study a volume profile, a host of complicated indicators or even listen to the folks on Bloomberg television. A trendline or a 50-day and 200-day simple moving average will suffice. As long as price is holding above a longer-term trendline (which it is), and as long as those two moving averages are trending higher (which they are), don't waste time inventing reasons to be aggressively bearish.

I'm not suggesting active traders shouldn't be prepared to trade a two-way market. By all means, if the price volatility is there, take advantage of the fluctuations. My point is this: if you're focused on the bigger picture (weeks or months), recognize that price -- which really is the most important piece of the puzzle -- continues to tell us to avoid the short side of this market.

As far as short-term triggers for a potential trend change are concerned, we still need to see upside excess in the Es and SPY. Barring such excess (which translates to higher prices failing to gain acceptance), I see no reason to be bearish, as long as we're trading above 1936 on the Es, and $194 on SPY. I know bears hate to hear this, but as prices continue to be accepted above the mid-1960s, your best shot at a decent decline is seeing prices spike higher first.

A recent addition to my long watchlist is Wal-Mart (WMT). I know WMT isn't quite as exciting as Twitter (TWTR), Netflix (NFLX) or Chipotle Mexican Grill (CMG), but sometimes slow and steady can pay off.

 

Wal-Mart (WMT)
Source: eSignal

 

Assuming WMT doesn't fade and crack back beneath its 50-day and 21-day simple moving averages, I like the stock long as it close above its $77.57 July 10 swing high. Should I get long, I'd likely use the 21-day SMA as a trailing stop. 

Additional Notes:

  1. With gold futures hanging on to $1300 by the skin of their teeth, anyone long the metal or miners will need to watch their risk should the GC contract trade down through the 50-day ($1294) and 200 day-simple-moving average ($1287.50), and close beneath $1280. As a reminder, the $1280 level was strong support throughout the month of April and May.  

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS

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