the markets breached support on Friday, what's next for the week ahead?

Q3Trading.com

Weekly Market Focus Report

~ January 18th, 2021 ~

Today we will be discussing the following topics:

What is the most recent Weekly Market Sentiment?
What might our Market Cycle Volatility Trend be telling us?
The question now becomes: Where might the markets go from here?
What are my Top Trading Tips, including the most recent and updated trading signals?

Let's Go!

"I would never jump off a cliff without knowing a bit about what is at the bottom. But I know you have to take jumps."

David Farr, CEO, Emerson Electric

Weekly Market Sentiment:

Bears out pace the bulls last week, as the markets cooled off with price action ends down on the week by the close from the Monday open.

The broad markets lost ground from its 3803.14 Monday open to a 3768.25 Friday close, for a 34.89 point decrease on the week.

Market Cycle Volatility Trend:

As of January 4th

Yellow / Higher Volatility

Market Cycle Volatility Trend Week Ending Friday, January 15th, 2021

Click Image Above For Larger View

When looking at the Market Cycle Volatility Trend above, the chart shows us when the financial markets turned recently to a yellow / higher volatility state on Monday, January 4th, our Market Cycle Volatility Trend went from a prior green up trend condition to now a yellow, which means the markets are now in a higher volatility environment relative to recent past.

To summarize, we are currently in a more volatile market condition relative to its past. What might this be telling us, and what might be a game plan for the upcoming week?

The question now becomes:

Where might the markets go from here?

After a Monday gap down, the markets sold off again similar to the week prior, but not nearly as pronounced.

The markets then traded sideways for most of the remainder of the week, with more selling than buying taking place with larger intraday moves on both Thursday and Friday to end the week.

By Friday we had breached first level support.

For the week coming, one of two scenarios are likely going to happen. We either continue to trade down more from here to test second level support. and then the 50 period moving average. The other scenario is we continue in the current range that we are in from prior highs to where we are now, the markets settle down, we get a confirmed green lower volatile Market Cycle Volatility Trend, and we possibly take off higher from here.

If the latter happens, we want to have our watch lists pruned and ready to go, otherwise, it's continue to manage what we currently having going, taking stops, locking in profits as trading plans dictate.

Top Trading Tips

To trade in the markets, whether it be stocks or options, the goal is to always utilize prudent money management with a focus on the following top three trading tips:

what is the current broad market volatility trend - up, down, or transitioning
for the stocks to be considering putting on a position, to put the edge in your favor, you want to have both fundamentally and technically strong, with ample volume, and in an uptrend.
diversification across multiple positions with equal risk on each spreads out the risk where any one position might go against you

With these three objectives, no matter what the criteria to be using, it is important to note that there is never a trade that is a guarantee sure winner from the start.

This is why trade risk management, having a clear, simple, and easy to understand trading plan to follow, with ample diversification of trades give you the greatest edge for finding long term trading success in the options and stocks markets.

Q4 2020 Top Trading Signals

NET: 89.94 point realized gain*

Click here for full details at our web site.

~~ Q1 2021 ~ Trade Signal Updates ~~

Trade Signals Now Closed / Flat*

AAPL - close / flat as of 1/4 price 130.60, prior long signal 12/28 price 133.99 (3.39 point loss*)

ATVI - close / flat as of 1/4 89.75, prior long signal 12/8 price 82.48 7.27 point gain*

FLGT - close / flat as of 1/8 59.42, prior long signal 12/30 price 52.34, 7.08 point gain*

FTCH - close / flat as of 1/4 59.99, prior long signal 12/31 price 64.41 (4.42 point loss*)

GRBK - close / flat as of 1/4 22.20, prior long signal 12/28 price 24.66 (2.46 point loss*)

JD - close / flat as of 1/6 88.86, prior long signal 12/24 price 83.39 5.47 point gain*

MNST - close / flat as of 1/4, 90.14, prior long signal 12/29 price 91.20 (1.06 point loss*)

TPX - close / flat as of 1/4, 26.46, prior long signal 12/8 price 24.94 1.52 point gain*

VERU - close / flat as of 1/5 7.82, prior long signal 12/24 price 9.15 (1.33 point loss*)

**AVTR - close / flat as of 1/15 28.44, prior long signal 12/1 price 27.60 .84 point gain*

NET: 9.52 point realized gain*

*Assuming trading signal is taken at price of entry or better, without consideration for trading fees, or slippage (frictional costs) and commissions.

** newly closed signal(s) published this week.