Rough Waters Ahead, Maybe…

Today’s action on the SPY was significant in the following ways. See the attached chart.

Volume was greater than yesterday’s trading, and the price ended lower in the intraday range. The daily SPY chart 50DMA was pierced at around noon time, but selling shares dominated the trade and the price retreated below the 50DMA, continuing to slide into the close.

Another important view is that the action is still sideways in a tight range since the rally last Friday. This sideways action right about the 50DMA is a battle between buyers and sellers. I would like to say with some certainty that the move will resolve to the upside, but while we are still below the 50DMA, any assumption of higher prices is pure speculation.

Not buying anything today was a good decision for a novice trader. Adjusting stops to make sure gains do not become losses was a good course of action. More advanced investors may have even decided to try some SH as a hedge in case we get a failure to break through the 50DMA on the SPY. More on the SH hedge another time.

Our model portfolio has 4 positions now. AAPL, V, GLD and cash.

AAPL consolidated from the great move we enjoyed since our entry on Friday 11/16/2012. It is back above the 200DMA on the daily chart and looking healthy. A stop below yesterday’s low of the day is a good profit protection move.

V held yesterday’s low despite increased selling volume today. Not really clear to me if it goes higher tomorrow or not, but I have my stop at the 10 DMA at around 145.65 on 1/2 of the position to lock in profits.

GLD sold off steadily today. My stop is below 168.50, because if it does not bounce and go higher from there, Friday’s move has been rejected and lower prices may be coming.

Cash is lovely. Keep it dry and safe.

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