Market Report: The pains of consolidation

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.  

The bears are back, wait the bulls are back and once again the bears have grabbed control. This is the classic definition of a market in consolidation, which is the most challenging pattern for traders. The indecision of markets and lack of commitment creates havoc for traders.

However, looking deeper into the price action it appears that markets are headed lower. We look at this market like a boxing match, the champ carries the contender for a couple of rounds before knocking him out. The price action suggests that institutions are selling every rally, the lack of volume tells us the rally was driven by the retail trader. 

We don’t predict markets, however everything we are seeing tells us the bull market is over. Lower highs and lower lows with light volume is a sign that big money are sellers. There is no guaranty, but expectations are the selling should accelerate.  

Last weeks options strategies were mixed, as usual call buyers led the way, but the rest of the top five we split between call and put spread selling as well as call and put selling. Options tell us that there is indecision everywhere.

The bulls were led by AAPL, QQQ, TSLA, IWM, and AMD. While the bears are selling BRCC, SPY, SPX, NEGG, and SPXW. Like the rest of the markets the action is mixed and uncertain

 As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control.

Todd “Bubba” Horwitz

BubbaTrading.com