Markets are flat to slightly up in pre-market trading this morning after yesterday’s sell-off. The FOMC meeting minutes come out later this afternoon.
Yesterday I exited the positions in PEP and ABBV even though most of the guidelines were still positive.
PEP closed down slightly yesterday but price action is having trouble getting past the 50-day SMA. Over the past 6 days price action was not able to give us a full candle close above this level. In addition, I also observed that our cost basis line at 176.26 was also providing some price action resistance. The upsloping 9-day SMA and the down sloping 50-day SMA are converging and at some point, price action will need to break in one direction or the other, so a sell limit was set above the 50-day and was hit with a wick for a small profit.
ABBV showed 3 days where price action fell below the 9-day SMA only to recover and close above this level. With resistance just above the cost basis a prudent move is to set a sell limit at or below this level where the limit hit and provided a small paper trade profit.
GD Just had a full candle close above the 9-day SMA – barely. The RSI is still below 50. In either of these positions, my guidelines were still showing positive readings, and traders with a higher risk tolerance might decide to exit a portion of their position or remain fully in the trade.
I am more risk adverse, and with a down trending market and FOMC meeting data coming out, I would bank my gain and wait for the next set-up.
For those adventurous types, CPB had a gap up full candle close above the 9-day SMA yesterday. All the oscillators are also positive.
Be mindful, the markets in general are in a downward trend so if you establish a paper trade position, set your stops accordingly.
No hurry to be in this market. Let markets work for you! Have a Great Day. This information is for educational purposes only and is not a recommendation to buy or sell a security.
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