ARETE THURSDAY NEWSLETTER

📉Have we even seen capitulation? 📉

Feb 26, 2021

Have we even seen capitulation? To start with the last thing anyone wants after the shellacking today is to learn a big word. Here we go anyway. Capitulation to surrender often after negotiation of terms, to cease resisting. In other words to throw in the towel after 10 rounds of getting clobbered and saying that’s it I have had enough. It did not feel that way today. We had orderly selling. We had massive drawdowns. I am sure we will read about a firm meeting massive margin calls today. However, it was orderly. I do believe we are bottoming across the indexes and I do believe the bull market is intact but no one knows where that bottom is. It feels like we need a real flush out. MAYBE TODAY WAS IT. MAYBE NOT. The key is to be prepared either way. Frankly, I like it when we sell down it means more setups in the weeks ahead at better prices on stocks I want to own. More opportunity is a good thing. You just need to be in the game long enough. Think of it like a marathon, not a sprint. I do not need to be the fastest just have to stay in the game longer than the next person.

I have taken the time to make a short min video of the Indexes I had a lot of requests for Bitcoin so it is on there. It worth watching for an explanation of what can happen tomorrow. The link is at the bottom of the page.

The $QQQ closed right at the 50-day moving average and the $312.50 support level. After hours it was breaking through that level. It’s a very important level. Breaking it could lead to a waterfall event. This means selling at any price. i.e. Capitulation. The $IWM is fairing better holding the $218.81 level. We do however have a bearish engulfing bar formed today which signified a short-term top last time that happened. The $SPY closed right on the 50-day moving average. Breaking that leads to $378.45 and $371.05. I think we are close to bottoming. We have various oversold indicators going off. The breadth of the market was 9 to 1. This means 9 stocks were down for every 1 up. Capitulation is usually at 10 to 1. Corrections are healthy. Honor your process and protect your capital.

Let’s look at the Indexes!

Let’s look at Stocks !

BP = Buy Price Range Stop=Risk Target = Reward

If you are stopped out of TWTR keep it on your radar. Very powerful chart.

There will be a lot of Buy Alerts in the next week or two. Take a moment to look at what could have been lost by not having a process in place that honors your stops.

Subscribe to YouTube! 👈Subscribe and turn on notifications. It is at the bottom of this page is a quick 5-minute index recap of what can happen tomorrow.

As always all investment decisions need to be made by the individual. We all have different risk profiles.No two people trade the same. Understand the buy points, stop losses, trims are suggestions. You need to develop your own process. I am willing to help and offer feedback. If you have questions message me.

Please make sure you Subscribe to Twitter! 👈and turn on notifications. There are times my updates are timely in regard to the Newsletter.

*For example I called the bottom in $QQQ today as well as the initial sell off.

Any questions please message me.

Thank you again for all the messages telling me how this Newsletter improved your performance and made you a better trader!

The Chasing Alpha Newsletter

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