Todd Horwitz Chief Strategist BubbaTrading.com
Be Prepared not Surprised.
Last week saw the markets look like they were going to breakdown ending the rally. However, on Thursday the CPI number was released and the markets fell sharply for about 30 minutes. Suddenly the selling was over, and markets exploded higher Thursday and Friday. From Thursday’s low to Friday’s close the Dow rallied 1200 points.
CPI was hot but the FED maintains that inflation is transitory whatever that means. Buyers stormed the markets with both barrels loaded driving all four major indices storming higher. Looking at the bigger picture, the rally leaves everyone with the same question, true or false the rally is over?
Obviously, we have no idea if the rally is over or was just taking a breather. The trend has reversed to down, Thursday and Friday’s action was almost enough to reverse back to up. The options markets suggest the rally has more room to rally based on the top strategies for the week. They have remained basically the same since the rally began, Long Calls, Bull Put spreads lead the way.
This week will go a long way towards determining the next big move. On the bull side the leaders are QQQ, COST, DKNG, SQ and IWM. On the bear side the leaders are TSLA, VIX, AMAT, DOCU, and WKHS. The next few days will be like a teeter totter trying to balance the next move.
One of the most important things all traders should remember, use the price action, and react to the market movement. Predicting the next move is a fool’s game, reacting to it increases your odds of winning. Patience, discipline, and money management always win the day.
Todd “Bubba” Horwitz
BubbaTrading.com