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Since late December the stock market large cap index has not trended up it has just churned. In 2014 $SPY is up less than 1% year to date. Equities are not being accumulated as an asset class they are being traded in and out of.
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This years market action has left buy and holders and investors in equities over all flat and have favored the intra-day traders and swing traders had a great trade off the $174 level.
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The opportunities this year have been in the leading stocks like $GOOG $FB $TSLA and $PCLN in the past week these to experienced profit taking and stalling out.
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Friday’s action appeared to be a short term exhaustion top the way it rallied strong in the morning then reversed all the way to red in the afternoon, this really showed how weak the holders above $186 really were and ready to sell as the fears about Russia and the Ukraine were growing.
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The toppy action Friday also occurred near the 70 RSI intra-day which is generally where up trends stall out and either reverse or go sideways.
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$187.15 is now our new all time high resistance level to watch in $SPY.
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$QQQ had a very large indecision doji candle Friday. $DIA failed at $164 Friday no where near all time highs. $IWM big rejection and reversal off all time highs.
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The way it currently looks with the unknown risks with the Russia/Ukraine situation there is a very high probability that risk off will begin in the futures market. The fear is in an escalation of the situation to the United States and Great Britain due to a 1994 disarmament treaty that was signed guaranteeing border protection if they gave up their nuclear weapons. Here is the thing, we all have to remember here, do not attempt to trade the news, trade the price action as it unfolds. If there is a sudden resolution to the conflict then the market could soar, if it escalates to an unthinkable stand off or even a major war then the market could plunge, if the uncertainty continues in this situation then the volatility could grow and position sizes will have to be decreased. An open mind to possible future price action is a profitable mindset for a trader to have.
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Key support levels to watch in $SPY are the 5 day ema end of day, 10 day sma intra-day, and closing under the $184 level watch out for a break of the short term uptrend.
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Purely looking at the chart price action alone the market weny from momentum to toppiness Friday, the probabilities for higher highs this week is low without a better price base, the risk reward is skewed now to the downside about 5:1 versus the upside. Bears couldn’t take it under the 10 day sma last week and we will see if a little geo-political risk gives them the fuel to finally take bulls down a few pegs.
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