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Looking back at history, this rally will be given back by September/October. We are the red line this year.

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$SPY $QQQ $IWM

https://commonstock.com/post/1d789446-5d4b-4b3d-9b69-359ef33c975d by @investorinsight

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I bought $TZA today at close after pitching it as my buy the dip stock over the next 6-12 months. $TZA is a bearish ETF that mimics $IWM. When $IWM increases, $TZA decreases and vice versa.

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I have been very patient on my entry to this position until a re-test of the weekly 20SMA and this downtrend line. We finally hit the downtrend line today and only a few dollars away from the weekly 20SMA (Green line). I utilize stage analysis in my high time frame strategies as a stage 4 decline often tests the 20weekly SMA before continuing down.

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This is a longer term swing for me as Powell stated the bear market is only beginning today (summarized) in his press conference.

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If you want to learn more about this position, click the link above for a full writeup on why I believe $TZA is a great swing trade over the next 6-12 months.

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$TZA is a 3x leverage Bear Etf that tracks $IWM. This is my pick through the next 6-12 months as we are entering into an environment of stagflation or a recession. If we continue to increase rates with inflation staying high, it will lead to stagflation. If we raise too quickly and inflation comes down, it will send unemployment much higher and push us into a recession. We very well could already be in a recession now given the macro economy.

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$TZA is showing signs of Wyckoff Accumulation which is often used my many hedge funds and big money to show accumulation of a stock. As seen below, it fits accumulation perfectly which should continue to climb into the gap fill around $90 resulting in over a 100% gain.

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In addition to the incredible TA setup, we are seeing a balance sheet runoff within the market as seen below. This is set to double at the start of September which should continue to put downward pressure on the market resulting in much higher prices for $TZA.

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Many people look at yield curve inversions as when we are entering into a recession over the next few months and as seen below, we have experienced a significant inversion.

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As we are in a recession and the balance sheet is experiencing run off, the chart below shows how small caps perform in comparison to mid/large caps during a recession and after. As we are in or entering a recession, small caps significantly underperform which will allow $TZA to see much higher levels.

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Given the macro economic trends and relative weakness in small caps compared to other stocks in a recession, my buy the dip pick this month is $TZA. I think this has 100% upside potential over the next 6-12 months and can be used as a hedge to play the downside of the market.

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Feel free to comment below your thoughts on $TZA as I will be adding this position aggressively if we see any buy up in the market to allow $TZA to be bought at cheaper prices.

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#buythedip My goal is to have the best return over the next 6-12 months. Even if I do not win the competition, our portfolios can win with $TZA.

$IWM is printing another weekly bear flag and as you can see this often ends up suppressing price to lower levels. If this breaks down again - $153 is the next downside target. Personally, I think this will revisit COVID lows by early to mid 2023. This is in a classic stage 4 downtrend which means short only or wait until it bases.

According to my charts the Russell is bouncing the hardest. The $QQQ & $SPXC remain somewhat lacklustre for now. New lows have dropped however.

$QQQ Stocks Above 100 Day, 150 Day & 50 Day

$SPXC Stocks Above 100Day, 150 Day & 50 Day

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I have been somewhat lax this week with a trading journal. I actually missed a planned trade on the $SPXC futures with a limit order by .25. At the time I was fine with this but yesterday I entered a similar trade much earlier than I'd usually like and I am putting it down to a touch of "I'm not missing it again". I stopped out and later entered a better long trade with very tight RR to end the day in the green. I also attempted a trade in $VIVO as biotechs are looking strong but the volume wasn't there and I stopped for a decent day trade profit. I am working with my scans and updating my watchlists but right now I am somewhat suspect of the rally. I do not see sustainable swing setups that I am happy to take so I am biding my time with a few hit and run trades here and there.

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Here is the basis of my trading plan today. If i get a really nice entry to the futures I will go long for a potential run to $3850. I will also see if there is any movement on my watchlists but realistically I don't believe this will be the case.

Traded $GTLB & $VIVO along with $SPXC by way of futures. Ended the day with a small profit. I should have continued both first trades as swings but I'm still so hesitant and slipping back into day trade mode. Which isn't necessarily a bad thing to be super careful but I choked my trades yesterday because I didn't want to see them even go barely red.

No positions going into Friday.

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Notes & Open Trades:

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Please note I operate my risk with options that I can lose 100% of the premium. This is the safest way to trade them in my opinion. Even if I cut at 50% once I am setup to lose 100% within my risk threshold then I will stay ahead of my required R:R.

I want to develop this section somewhat along with the tools I use to measure the market. I have been building some simple market breadth indicators and charts. These could be very useful to any trader or investor. h/t to StageAnalysis on Twitter for some inspiration on these. All of these are built in Tradingview.

$QQQ Stocks Above 100 Day, 150 Day & 50 Day

$SPXC Stocks Above 100Day, 150 Day & 50 Day

The above charts are useful warning or buy signals. For the moving averages you want to see at least 30% of stocks move above the main averages before considering a buy and you want to see that trending upward. Same for New High/Lows. As you can see today we have made 618 New Lows while only making 2 New Highs! That is not a market you want to buy!

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Only stock that caught my eye today was $GO. But not looking for any swings while this level of selling is happening. Trimmed all my watchlists with the stocks that have been badly broken the past week.

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Executed a small but good $SPXC futures trade toward the end of the day today. I entered at $3642.00 with a stop at $3635 and a profit target of $3665. I sold after a few minutes at $3670 exactly. Perfect in and out trade. It's really nice when they work like this.

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It's very important in a market like this not to force trades. I've said before that if I try to consistently day trade I get frustrated. When I am working toward swing trading it's interesting I find the one or two hit and run day trades much easier. It's as if there is no pressure and I am far more patient. It is such a different feeling to sitting down at the beginning of the day searching for trades to make.

I hope we begin to level out soon however for now I will remain patient and look to make small moves or none at all. Tomorrow is a large options expiry date volatility and shenanigans will be high!

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Notes & Open Trades:

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Please note I operate my risk with options that I can lose 100% of the premium. This is the safest way to trade them in my opinion. Even if I cut at 50% once I am setup to lose 100% within my risk threshold then I will stay ahead of my required R:R.