The US market had 4 trading days last week because of the Presidential funeral. The week started strong on Monday trading to 26000, Tuesday selling day with no trade Thursday and Friday sell off continued and we ended the week at 24388 points.
We are technically at support 24250 points, we have had this support severally this year at 24250. Monday this week looking at the pre-market data we are down indicating the market will seek to open lower and if the support does not hold the DOW could trade down to 23500 points.
This sounds scary but if we take a holistic look, the year started out around 23500 points and it is possible we may end the year around 23500 points support line. Looking at whole picture we do not have a bearish trend what we have is a bearish volatility. Bearish trend and bearish volatility are different things.
The Exponential Moving Averages are in the middle of the candlesticks and if you follow previous post, you would know that we cannot rely on the EMA in a sideways trend. This looks more like a consolidation until we begin to have lower lows. In this case we use the oscillators.
RSI is reacting quickly giving good signals and currently it is back into oversold region. Stochastic and the MACD are heading back down signifying bearish move.
S&P 500 is similar with the same structure on the support which is around 2600.
NASDAQ looks orderly and they are leading the way with Tech stocks selling off. More selloff to come and Facebook and Twitter to expect more selloff. Apple is in a similar selloff. When we hit the bottom, we will have a good buying opportunity.
COKE is done well in October and November rally and pull back to the 20 EMA and a rally and a pull back to the higher low to the 20 EMA. This is a good bullish setup for about a $1 or approximate.
Trade Set up with an Entry at $49.70, Targets for $51.50 and up to $52.50 with a Stop at $48.80. This is a bullish trade set up and traders can either buy Long calls for January or February 2019, buy LEAP calls for January 2020, buy the stock.
This is an adventurous trade for this week with not a great risk reward, but it is okay all because of the volatility in the market.
Entry is at $122 with a Target of $112 and a Stop at $128. This is a bearish trade setup where Traders can sell short or buy long January or February puts.
Happy trading week and see you soon.