With broader markers in a corrective phase at this time, we have many new students coming to Master Trader look for help with their swing and day-trading.
Rightly so, they are frustrated because of getting whiplash with the market’s recent uncontrolled volatility?
Although that volatility is not the norm on a consistent basis, markets go through periods like the current one after an advance.
Once you need are able to recognize uncertainty in chart patterns and find quality patterns, avoiding whiplash becomes second nature.
The Master Trader Technical Strategies (MTS) using multiple technical concepts that form Investing, Swing, and Day Trading Strategies.
Price patterns showing relative strength or weakness is one of those concepts.
MTS patterns alignment on Multiple Time Frames (MTF) displaying Relative Strength for longs and Relative Weakness for shorts puts the odds on your side.
We have an incredibly high success rate in picking direction using the MTS.
Below is a daily chart of SPDR S&P 500 ETF Trust (SPY).
It is in an erratic trading range now after slicing through Major Support (MS) after a Breakout Failure to all-time highs.
We started initiating directional short positions on last week’s bearish reversal at resistance and 20-MA (Tuesday, 5/18).
We are going to show you some of the actual trades given to the subscribers of our Swing and Options Advisory Letter and the Weekly Options Trader.
Each has a compelling bearish Setup plus all showing significant relative weakness since they were unable to bounce with the robust bounce in the broader markets last Wednesday – Friday.
Using Relative Strength and Weakness is one of those factors to increase the odds of trade success.
Relative Strength suggests continued out-performance; however, that does not mean we want to own that issue.
Although that is not a reason alone to take a trade, combining the concept with our other checklist items helps ensure that you will only trade the best setups with the best odds of success.
Below is a daily chart of AGCO Corporation (AGCO).
It was a beautiful anticipatory entry on the bearish engulfing day where marked. The reversal in the broader markets gave us the confidence to enter early.
Although we trail stopped out over a prior day’s high for a huge 3-day gain, the huge Price Void (i.e., lack of significant support) on the weekly and monthly charts suggests lower prices, so we are watching to re-enter on a bounce.
Below is a daily chart of Autohome Inc. (ATHM).
ATHM is a perfect example of extreme relative weakness! Not only is the price action extremely bearish, but it was unable to rally with the broader markets.
Dictionary.com defines Relative as “existing or possessing a specified characteristic only in comparison to something else.” In trading, we compare the issue to many things, including Index ETF, sector, and market internals.
Below is an hourly chart of ATHM and the Invesco QQQ Trust (QQQ).
We are comparing it to the QQQ because its industry is Internet Content & Information.
You can also see the same relative weakness by comparing it to its Sector: Communication Services. You can see the glaring weakness in ATHM in this time frame – power downtrend (lower lows/highs), under 20-MA, shallow retracements, Green Bars Ignored (GBI), and inability to rally with the QQQ or sector.
Below is a daily chart of Sleep Number Corp (SNBR).
Here are a few more on our radar this week which are all compelling breakdowns and showing great relative weakness:
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To invest in ETFs for weeks to months to generate wealth with compelling patterns using MTS, see Master Trader ETF Investment Trader.
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We love hearing from our subscribers about their successes and journey towards trading mastery!
“Hi Greg, Hi Dan,
November last year I bought the Platinum Strategies Package. I finished the last module today. I learned a lot.
I want to thank you both for all the effort you put into the courses. It helped me a lot in my trading. It made me (even now) a lot more profitable and (maybe more importantly) more consistent and confident in the markets. I’ve been trading for many years, but with varying success and many failures. You put me on the right track.
The profit I made these last few months already paid for the costs of the courses, so that was another good trade 😊.
Thank you again, and I will keep on following your webinars and repeating your courses to ingrain all this to an unconscious competent level.
Best regards, Maarten B.”
Master Trader and You Building Your Financial Future Together!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra Managing Director of Master Trader
Dan Gibby Chief Options Strategist
