Weekly Update: Struggles Persist for the S&P 500
Another week… same story.
As I pointed out last Friday, the S&P 500 index was struggling at the downtrend line.
Data showing a slight weakening in inflation caused stocks to gap up on Tuesday morning before violently selling off for three straight days.
The weekly chart below shows this clearly:
In a game filled with up-to-the-second news and 7,000 investment choices, it is easy to become overwhelmed and flip opinions with every tick.
That is why the weekly chart is so important.
Step back. Look at the big picture. And trade in the direction of the overall trend.
Right now, that means short (or at least not aggressively buying anything).
Here are a few short trades I am watching now:
Centrus Energy (LEU)
LEU has been making lower lows and lower highs since September.
The stock fell 40% off its highs over the last 3 months and is now holding below its 200-day moving average – a crucial line in the sand for any stock.
LEU is forming a support shelf near $33. If this fails, I will consider selling this stock short for a continuation lower.
Alliance Resource Partners (ARLP)
ARLP is forming a giant bear flag.
The $21 level (white dashed line on chart) is a significant one for this stock. It served as resistance before the breakout higher and then became support in the second half of the year.
Bulls are fighting to defend it here, but if that level breaks… watch out below.
Otter Tail Corporation (OTTR)
This is another textbook example of support becoming resistance.
When there is heavy selling like we saw in OTTR in early November, institutions are showing their hand. They are dumping the stock and possibly even selling it short.
From that point, the only question is where to get in.
I like to sell short on a re-test of previous support like we had here in OTTR.
DISCLOSURE: I am short OTTR from 60.25.
Best wishes for your trading,
