Four consecutive lower weekly closes for the S&P. IBD says that the market rally is under pressure, but waiting for more evidence to determine if the rally is over.This week is OPEX , but it's also the beginning of earnings season. As you can see from the SPX daily, we are in a consolidation chop until we get a catalyst to retrace or continue lower.
Friday's Catalyst Trade:
MOS breaks out in early trade (TI scanner), so I focus on Agchem. I'm looking for some consolidation. I don't want to chase MOS, so I look to see how AGU and POT are trading. They both stall at PDH and then everything reverses. It happens very fast and I don't know what the underlying catalyst is when I start scaling in. As it turned out, Russia sold a very large order of potash to India, undercutting market price significantly, so the whole sector suffers yet another setback.
Notice how after capitulating, POT couldn't get a bounce. I should have covered the POT short and entered long MOS, ie. short the weakest and long the strongest, but in the heat of the trade, I wasn't thinking smart.
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