Do Not Overtrade This Market Carelessly

Need I say more?

Today was a prime example.

Market opens higher on a level of optimism about talks with China, although no real substance to that optimism exists.

It continues to trade higher right into resistance.

Semiconductors SMH had to clear and hold over 94.00, (high was 94.48.

Transportation IYT had to clear and hold over 190, (high was 190.05.)

By midday, the market retreated from those highs, yet remained green.

Then, in the spirit of the current phase (distribution), wham, the sellers came in.

The road sign (pictured) that we saw in Kingston, Jamaica, immediately came into my mind.

I knew I would use it one day for the Daily.

Why, more than ever for the last 2 years, must we avoid “overtaking carelessly?”

Simple answer-the phase.

The S&P 500 and NASDAQ are in Distribution phases. The Dow is in a Warning Phase.

Today, the Russell 2000 IWM, had a death cross or entered a Bearish Phase.

In the economic Modern Family, Regional Banks and Semiconductors are in Bearish Phases.

Transportation and Biotechnology are in Distribution Phases. And  Retail, the strongest, is in a Warning Phase.

Where is the good news in that?

All of you newer traders weaned on a buy the dip market, should take extra caution now before doing so.

Does this mean we cannot get a sustained rally?

Anything is possible of course.

Then again, with a global slowdown, oil has been crushed. The rates remain firm.

The U.S. debt has skyrockted.

The geo-political environment is uncertain at best.

Add that all together with the negative Phases and what do you have?

A stock picker’s market within a heavy, sloppy and choppy trading range. Or worse, finding yourself dead wrong.

S&P 500 (SPY) Made a weak attempt at the 50-WMA at 275.16. Now, we could see 270 then 268.

Russell 2000 (IWM) Under 150.50 (closed right there) more trouble coming. A move over 154 would be a relief. Bearish phase

Dow (DIA) Confirmed warning phase and probably on the way to test the 200 DMA at 251 again

Nasdaq (QQQ) Tested 170 and now could see 160.

KRE (Regional Banks) 55.00 pivotal support holding.

SMH (Semiconductors) 94 resistance with 88.50 support

IYT (Transportation) 190 resistance and still has a little support at 186.50

IBB (Biotechnology 106 failed-now resistance.

XRT (Retail) 47.80 the 200 DMA