Fundamental Analysis: useless in 2020

Given the indecipherable fluctuations of the economy during this year, the title of this post reflects one of my feelings about this unusual 2020 stock market. A Q1 quarter where the SP500 falls 20% and the next Q2 turns around and rises the same 20% is surely something we will not experience again in our lives. Thus, it's complicated to make a serious analysis in an index ETF as usual, that is to say, reviewing both fundamentals and technicals details, alike.
Powell and the Fed with its zero i-rate (good decision) and unlimited QE (excessive) are artificially propping up the financial markets, literally destroying the risk in markets, instead of investing for growth, just for trying to hide the US (and global) recession, already foreseen since January and accentuated by the coronavirus. Now we have market indicators at dangerous edges, like the SKEW index (that measures the risk of a black swan, a 20%+ plunge of markets) spiking now above its March levels. Or the Nasdaq Put/Call…

My Stock Watchlist for June-July 2020

On my Thinkorswim trading platform, I manage several watchlists, differentiating them according to the instruments it contains. There are stocks, futures, ETFs, sectors, and indices watchlists.

My different ETFs watchlists usually keep the same symbols in time, diversified by sectors, industries, countries, commodities, both at 1X normal speed and 3X triple speed.  My Indices, sectors, and futures watchlists are also fixed, covering the main indexes and commodities from Wall Street and major foreign exchanges, usual symbols well-known by all traders.

Those that do change, usually monthly, are the symbols of my Stock Watchlist, stocks which I follow on a daily basis, due to my own research, that consider both fundamental and technical analysis, news topics, or simply popularity. Over time, it appears in the list new stocks, disappear others, according to the importance they are acquiring, in my opinion.

June-July Watchlist
After three months using hardly my "coronavirus strateg…

Best Candlestick Patterns for Price Action Analysis. Part 1

As mentioned in a recent post, the key for a better Price Action Analysis with candlesticks is "read" them at a glance and the patterns it forms, mainly when price approaches an S-R level, doing always in conjunction with volume.

Candlesticks are a reflection of what buyers and sellers are doing. You need to know its meaning: indecision, rejection, reversal, or momentum.  In Price Action Analysis, less is more with technical indicators: a few of them are enough. The same idea for candlestick patterns. You can find dozens of candlestick chart patterns, but I feel comfortable with a few of them, the most accurate in my point of view.  No need to memorize them all, just understand the mechanics behind this tool. Consider the following:

Single candlesticks
1- Pin Bar (or long-wick candle): the longer the wick, the better the candle. This candle means that indecision began, as buyers tried to push price higher but failed, causing the wick to show, meaning a rejection. There are b…

Price Action Analysis for Day Trading

In these days of coronavirus threat and extreme volatility in markets, it's risky for a conservative trader to enter with long positions, even in the short-term. With the SP500 now in a rebound (only due to portfolio rebalancings of investment funds and smart-money short-covering, not fresh money), the key is to see how the SPX will behave when it approaches the 50% of its Fibonacci retracement if it does. Historically in all crashes the Dow Jones (or SP500) have two minimums, the second even lower than the first. And with a world recession in the background, it is more than likely that this will happen in the next weeks.

Therefore, since the end of February, I closed my entire long portfolio and have no long positions when the daily session closes. In March the same: zero longs. I mean, I only do day trades on Index ETFs as SPY, QQQ and IWM. That's my "coronavirus strategy" in days of VIX above 50: preserve cash and do only day trades, closing the trade before the s…