Major averages stumbled, stabilized, then finished near breakeven except for the Russell 2000 which has been showing more pronounced weakness compared to the other major averages. Perhaps this is an ill omen, much as the Russell 2000 showed pronounced weakness in late 2007 which quickly led to the beginning of the bear market and ended in disaster. That said, QE was not part of the equation back then, and has shown itself to be quite the formidable contender to bears. Nevertheless, it is important not to get complacent since market pullbacks can be profitable shorting opportunities as we have fully discussed in our webinars.
Electric car maker Tesla Motors (TSLA) had a pocket pivot but closed near breakeven in the lower half of its trading range, thus is an example of a weak pocket pivot when taking into context that the market, after a bout of initial weakness, retraced its losses and remained fairly strong for the rest of the day, though volume was lower. One strategy would be to buy a position should it clear Monday's high. A more conservative strategy would be to wait for a stronger pocket pivot before buying. However, the issue of buying into TSLA is further complicated by the fact that the company is expected to announce earnings next week, and one would have to determine how large a position in TSLA one would want to hold into earnings.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.