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In the short time since Monday, the S&P 500 has gone from gapping higher to 1370, to retesting its prior 52-week highs at 1344. As momentum plays have been punished, sentiment has decidedly taken a turn for the bearish. Beyond that, breakout plays continue to struggle, at best. Thus, I have been mostly a spectator this week, increasing my cash position by the day.
The key point to remember in this situation is that the bears will need to exact far more technical damage in order to render the overall bullish case null and void. Despite how ugly the price action is in some of the former “can’t miss” trades, the market is bringing it in for a real pullback. The test now is to see whether buyers step up to the play and defend the 1344 area. If not, then we would be looking at a test of the upper end of the prior trading range, around 1332. If that happens in the next day or two, we would suddenly be in a short-term oversold situation. In the meantime, I am focusing more on identifying potential support buys in lieu of breakout plays.
How do you feel about WNR going into earnings? What are chances of success with a “Double Down”?
No opinion on WNR earnings. My own style is not to hold any stock through earnings. I have missed out on some massive gains with that strategy, but also on big losses.