Environment > setup
Overall Market Thoughts
Last week's report Strong but Stretched was focused on the market being strong, but very extended, and my goal was to not press the gas again until the market consolidates or pulls back.
The market was still acting well, leaders were still leading, and I was still optimistic. But semis were extended, sentiment was getting too far one sided, and I was coming off a huge April/May run that I wanted to protect.
We got a pullback this week which was to be expected but I didn't expect the magnitude of the action we saw Friday. That action reminded me of October 10th last year. We recovered shortly after but the environment became very choppy.
Last week was the first time since this entire uptrend that Nasdaq closed at dead lows and below the 4-week moving average. Regardless of which way we go from here that is a big change in character from the previous 9 weeks and warrants short-term caution.
The question this week is not "Are we going higher or lower?" Short-term I do not think we know that yet.
The better question is "Did the environment get harder?" which yes it did.
We felt it change earlier in the week. We all noticed stops being hit more frequently and it becoming a little harder to make progress. Friday solidified it and I think more observing than acting this week will be better.
If you haven't yet read my post from Saturday on X check it out below with what my overall thoughts are.
My plan this week
My job this week is not to win back Fridays losses or force action because there are still good looking charts. My job is to avoid digging a hole while the market gives us more information.
Not worried about up or down, focused on gaining some clarity first.
This report highlights where I see RS within growth groups which I will continue to track because what stays near highs when everything else sees pressure is usually what moves the most when the markets wind is at its back.
Current Positions
If we open tomorrow gapped higher by any chance, I will likely exit half of my remaining $MU. Then try to watch and see if the rest has a chance to end the week over the 4-week.
If we gap lower tomorrow, I will be watching for possible bounce and reclaim to make decision on remainder of my shares.