Morning Scoop
Good morning! Today we get the highly anticipated message from Fed Chair Powell to Congress about the outlook for inflation and interest rates. I don’t expect it to be smooth sailing in the markets today. I would be prepared for whipsaws, days like these make it tough for short term outlooks such as day traders and swing traders. Let’s dive into how to navigate the markets today!
Markets
- Well, this week is going to be constant reminders of economic news. Expect the theme to stick as today is just the beginning of it.
- Looking at futures on the daily chart right now we can see we’re still at this white line that we sat at all day yesterday.
- Futures are technically green right now but not by much, I’m personally not looking to hold anything while Powell speaks. If I do its extra small and just to test the waters.
- Let’s zoom in and see what’s happening internally in the futures chart.
- That big spike above the white line is yesterday’s morning move. Looked like we we’re headed for more upside. Then we fizzled out and got stuck back where we started.
- This chart on the 1 hour looks weak to me, due to the run up, then just no effort to get past that high again. Keep in mind its waiting on news but even without it, this is not an area i’d look to go long at, especially due to the big run up on Thursday and Friday already.
Trade Idea
- Not recommending any trading today, but this is one that can be good to watch or at least pay attention to what it does from here.
- The white lines surrounding the price action are Bollinger bands, these are set at a 2 standard deviation move away from the 21 day moving average. Basically giving us clues when price can be extended either direction.
- This case we’re a few days extended in this name, its not a bad time to look for a pullback from here.
Tricks of the Trade
Lets take a look deeper into FSLR for our trick of the day.
As I mentioned above, the daily chart was extended already and when I see this name that many days above the Bollinger bands, its a good spot to take a chance.
Keep in mind just because it seems good does not mean it won’t go against you.
Now a simple way to play this, is by looking for a whole number and using that as your entry or level of interest.
Friday we saw this reach 210 but we don’t want to take a trade at the end of the day Friday, so Monday rolled around and it open over $211. Then makes a run up to $215.
Now our focus is, okay, 4th day out of the Bollinger bands, market is kind of weak, this could use a pullback.
Short around $115 give yourself a 1:2 Risk to reward. Stop loss at $216 or $215.50 and look for a $1-$2 to the downside and you could cover very quickly.
Wrap-up
Anticipations are high, charts are stuck in a fight between bulls and bears. All for a few words from Powell. I don’t take these events too serious, but they do interrupt the flow of the markets especially for day and swing traders so its something we have to be mindful of. Otherwise if we ignore it, we could jump into a trade that looks excellent from every technical perspective and the wrong words from Powell will crush your positions. Be careful out there and protect that capital!
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