Stock Market Highlights - Week 34
- U.S. markets tumbled more than 5% as worries mounted over state of the global economy.
- WTI was $40.45 and brent crude oil $45.46 on 8/22. Still no bottom on oil prices, yet.
- Alibaba shares plunge closer to $68 IPO level.
- Uber projects three-fold rise in 2015 bookings worth $10.84B.
- Valeant to buy female Viagra maker Sprout Pharma for $1B.
The Dow Jones Industrial Average (DJIA) closed at 16459.75, which was about a 1017 point decrease versus
a week ago of 17477.4 on Friday, August 14th 2015! If you still don't believe we are in a downtrend, then I don't know what to tell you. As we had mentioned last week, in order for the bulls to take control we wanted to see price action above 17610. Well, the bears ripped that dream from the bulls. Instead we saw massive selling and the fact that it closed at the low of the day is not a good sign for the bulls.
Though the bears appear to be in charge in the short-term, for those who are not short the market, we would want to wait for a pull back before trying to chase this sucker down.
The S&P 500 closed at 1970.89 on Friday, August 14th 2015
versus a week ago of 2091.54
on Friday, August 7th 2015. This was about a 120 point swing to the downside. Last week, we said that it could go either way. The market decided to pick the downside and with conviction it did.
We were ready to pick a side at the first indicator of where the market was headed. Wednesday's price action was a hint of what was to come, however it managed to hold at the 200 DMA by the end of the day. However, when the market opened just below the 200 DMA on Thursday, that was our signal to watch for downward action. We initiated a small position shorting small caps on Thursday, August 20th.
The Nasdaq (COMPQ) closed at 4706.04 on August 14th, 2015 versus 5048.23 on August 7th, 2015. We saw signs of deterioration last week and now we have confirmation. These gap downs in the last two days were even more aggressive than that of the SPX and the DJIA. Still the action suggests we are not done and the dust has not settled. Like the DJIA, this would not be a time to chase this price action. We would like to see it pull back and then enter on confirmation of further continuation of bearish action.
FitBit Inc. (FIT) has been a mention of ours in the past few market reviews. It is a fitness band designer and manufacturer. Also one of our most profitable trades in the last two months.
After disappointing the market on earnings, the stock gapped down. Our play was a gap fill, however we needed to see price action reverse. At the first sign of such action, we entered in and got denied at the 20 DMA, where we prompted exited.
Disclosure: We do not have a position in FIT at the time this article was first written.
The information provided on this site is not advice to buy, sell, hold, trade, or invest in any securities. I am not a financial professional. Do your own research before acting on any information provided on this site.
Labels: Weekly Market Reviews