MARKET SUMMARY (12/16/19) – NOTHING OBVIOUS

This should be short and sweet.

In fact, the last couple of my e-mails to close out the year should all be short.

As we wind down 2019, my mentality is focused on protecting profits. For those of you who have been following my trades, you should have a decent amount of profits too. In the trading account where I posted live trades since March (on my Twitter @marketmind3), I’m up a sizeable +83% for the year. An incredible year by any measure.

Market trading volume should dry up as we hit the holidays and year-end, and it looks like we’ll have a typical choppy, but mild, end of year. At most, we might get a potential short-lived panic move at some point because of the low liquidity. Either way, unless there is an obvious set-up, I’ll likely not play.

That doesn’t mean I won’t still be watching. If a set-up happens, I’ll take a shot. I’m always in front of the screens.

So what do I see today? Mixed signs.

The daily charts look bullish, but are showing some grinding action where momentum on this latest push up has been weak. Similarly, the weekly chart is making new highs (bullish), but the MACD, though still bullish, is moving up at a decelerating pace.

So we have prices going up, but momentum weak and ready to turn at any moment. Stepping back, we still have to acknowledge that nothing has broken down yet and that any short bet is just gambling.

So we sit on our hands and watch. I’m still inclined to look for very, very short-term shorting opportunities. But for most of you, this isn’t even worth trading. We’re in no-man’s land and just have to accept that the market won’t give us any fat pitches. And we’re definitely not going to force any trades here.

Trading is all about discipline. I’ve never been concerned with catching every single move the market makes. I’m only interested in making trades that I think have the right risk-reward to make money. That means sometimes I know I’ll miss out on some profitable trades (like this little mini-rally the last few days).

You can’t be successful trading until you can learn to be comfortable missing out on trades.   


2 THINGS ON MY MIND

1. From my Twitter this week: “To make money trading you have to be patient and flexible. My charts were pointing down and I was getting cautious…but so was everyone else. Patience kept me from getting short, and being flexible kept me from staying bearish.”

I can be cautious one day, but throw that view out the window the next. When the market signals (charts, sentiment, whatever) tells me to change my mind, I listen.

2. Bitcoin has broken down from its triangle and is below support, but I’m willing to keep a loose stop. I’ve lightened my long position, but I see positive MACD divergence and the fact that it’s still holding above a decently emotional bottom from a few weeks ago. That keeps me long and willing to give my position some flexibility.

 


A CHART THAT CAUGHT MY EYE

AMC – AMC Entertainment

AMC Entertainment (not to be confused with AMC Networks, the cable network) is one of the leading movie theater chains in the country. Yes, these days more people are choosing to stream their movies at home rather than spend the money to go to a theater. But as usual, taking the other side of a consensus, lazy thesis is usually profitable. With a continued attempt at improving their theater experience (better dining options, alcohol, and theater features), innovations like a subscription, all-you-can eat membership, and a strong release pipeline from the studios, the catalysts are there.

The chart set-up is simple: double-bottom on the daily chart with positive MACD divergence, and overall constructive technicals with an oversold RSI, and stochastics and DMI turning up.

Strategy: Buy here, stop out if we break below the double bottom support. With the bearishness and short interest, I like this as a nice turnaround story.

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