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200 DMA holding: consolidation or more pain coming?

S&P 500  2605.00 -7.62 (-0.29%)  Dow 30  23848.42 -9.29 (-0.04%)  Nasdaq  6949.23 -59.58 (-0.85%)
 

S&P PanicThe market was dragged down by technology stocks again today. But the draw down was as violent as yesterday or last week. It doesn’t mean that this can turn tomorrow into more selling.

The stock market hold 200 DMA so far but will that level hold? Here is what I think.

 

 
The issue here is Trump (again) bashing Amazon (AMZN) for who knows what hatred he has against the company which has enough market cap to drag down the entire market. Along with depressed Facebook when spooked investors worried about regulation of tech. stocks went on a selling spree. Nevertheless, my opinion is that this is again just a technical selling not supported by fundamentals. All you need to do is survive this downward pressure.

We are still dancing on 200 DMA which may be a good thing. It may be a consolidation before the recovery of this selloff starts. But I am afraid that this is not the case.

I am afraid that more pain is coming on us. The more we knock on the support level (200 DMA) the more likely we break through. With the weakness, extreme pessimism, investors pulling money out of the market I think we haven’t seen a capitulation yet.

We still may see bounces now up and down in coming days before we see some movement. This may be an extremely choppy market. The best thing as a trader is to stay away from this market until it shows direction it wants to go. Then we may have about 2 – 3 months to recover from this correction. Hopefully, it will not turn into a bear market. As of now, we are heading to it.

Some investors believe that we must close below 200 DMA to start the recovery, other believe that closing below 200 DMA means we entered a bear market. Let’s see who is right. Technically, both can be correct but none guarantee that the bear market really happens no matter how weak and pessimistic it is out there right now.

 

 · Trading activity today

 

A summary of opening and closing trades.
(premiums received / paid: + $2407.00)

Note: This is a cash flow of credits, not profits!

I didn’t have much time today and only did a few adjustments. This market is driving me crazy as it doesn’t show any direction but whipsaw movement. Such behavior is a killer of any trader or at least me as I struggle trading this and be safe on any side of the trade. This is moving any direction close to 2 SD every day. Very difficult to trade it. So, if you can, stay away from this market, and only manage existing trades.

 
0323trading
0323trading
 

Definitely, this market is now a test of my nerves. This selloff will not last forever and it will recover and go higher. The only question is when, and how long this selloff will last. Will we be able to sustain a prolonged time of depressed trades?

 

 · Dividend stocks to buy

 

Out of our watch list of 37 dividend stocks the following ones are a good buy at today’s prices (03/28/2018):
 

ABBV
ADP
AGNC
AWK
BA
CVX
HD
KMB
MCD
OXY
PG
XOM
 


Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 





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