Does The Future Seem Brighter Now?

That didn’t take long. Dow up nearly 1000 points in a week. Sentiment changes so quickly these days in these times of uncertainty. How was everyone feeling after Thanksgiving?

A bit of indigestion for sure. Back in risk ON mode now? I cannot recall such an extended time of quick turns in trading and very little pleasure from these moves.

This week was a great example of how you miss out when you’re out of position. On Monday and Wednesday the market gapped higher on the open more than 3% each day.

Friday also saw a big gap higher following the jobs report but then traders faded the market. Still, the markets had one of the best weeks ever – rising nearly 7% across the board. Of course, those expecting some mean reversion like Darren Miller knew there would be a big move.

As we navigate through this news-driven market our challenge is to sift through the rummage and find the names that will give us profit opportunity. With the markets not giving much chance to get in ‘safely’ we look toward the best trends up and down.

Clearly the down trends favor sectors such as large banks, brokers, ag stocks, consumer durables and retail, while tech, energy, materials and industrials have shown some life. The difficulty of course for making bets is knowing you’re on the right side of the trade.

Last Friday’s sentiment was as dour as could be, setting the table for a potential rise.

Looking to the chart we see more back n’ forth action within a wide range. At some point there will be a powerful move above 1290 or below 1160 (the bollinger band ranges). The noise in the market is loud and with the volatility this is a trader’s dream.

Markets are slightly down for the year. News will continue to move markets through the end of the year and beyond. With the big move last week I’ll be looking for a bit of back n’ fill and adding on dips.

Bob Lang is the founder of option trading newsletter Explosive Options