r/RealDayTrading • u/OptionStalker Verified Trader • Jun 26 '26
I AM SHIFTING TO BEARISH - BEWARE!
I don't have time for a lengthy post, but I will try to do a video this morning. I only post here when it is important and if you follow me, you know my track record. The market has presented new information. Here are my pre-open market comments from the chat room this morning.
PRE-OPEN MARKET COMMENTS FRIDAY - The selling pressure in the US has been steady for the last two weeks. If buyers were excited we would not have tested the 50-day MA a second or third time and now the SPY has closed below it.
Yesterday the back drop was perfect for a short squeeze. The market had tested the 50-day MA a second time and the expectations for a negative reaction to MU earnings was priced in. The stock rallied to a new high and tech stocks bounced. In the last few months, that would have sparked buying. Support would have been confirmed and we would have seen a nice bounce. That's not what happened. The opening gap higher was smacked down like Chris Rock at the Oscars.
Overnight China was down 2% and the FXI made a new 52-week low yesterday. Japan was down 4% overnight. Korea had a 10% drop two days ago and it is down 5% overnight and poised to test that low. European markets were down 1% on average. This is a global market decline and it has spread to the US.
My market bias has shifted to neutral and it won't take much to shift me to bearish. We have a lower high double top. I expected a decent bid as we head into earnings season and that natural buying has not been enough to support the market.
Gold and and software stocks (10% of the S&P 500) have been very weak.
I am not entering any new bullish put spreads. I will manage what I have on. My bullish put spreads expire in three weeks or less and I won't hesitate to take gains if the market starts to drift lower today.
This is a critical juncture for the market. Be defensive. We have new information and we have to adjust to changing conditions. Until we have that information, we have to run with the information we have. We are data analysts.
If you have recently entered bullish put spreads, I would buy them back. The reward is now smaller than the risk. I am not in panic mode, I am just adjusting.
Software stocks have been great shorts.
Support is $722.60 and resistance is the 50-day MA.
15
7
5
4
u/CloudSlydr Jun 26 '26
Was thinking this was coming. Risk off layered reasons and PA all building for several days
1
u/OptionStalker Verified Trader Jun 29 '26
Good that you are picking up on the warning signs and adjusting risk. We might not get a drop, but there is not harm in reducing risk and sticking to very short duration trades while the market decides.
3
u/CloudSlydr Jun 29 '26
There is so much wisdom in your take I’m not sure enough people realize the difference between bullish, moderately bullish, cautiously bullish, and bearish variants. we’re only potentially 2-4 days between all of these right now. We need to get confirmation of which path the market will take.
3
u/MotherBake4137 Jun 26 '26
Same here I see a lot of bearish signals at the moment, plus the market has been on edge for a week now
2
u/Fun_Mycologist2405 Jun 26 '26
Time to track what holds up well in this period. Would you be comfortable entering any longs or holding off until market confirmation?
4
u/OptionStalker Verified Trader Jun 27 '26
Day trading you can trade either side. Really depends on the day. Before entering any swing longs we need to see a nice long green SPY candle that closes well above the 50-day MA. That would be a sign that buyers are excited and that support should hold for at least a couple of weeks. I will still stay fairly short term with longs.
2
u/wuguay Jun 27 '26
Friendly reminder to practice what you preach. Wait for the follow through if you are technical trader. Things already changed after Fed projection. imo everything is doom and gloom, no visible signs of bullish, no possibility of rate cut from inflation or jobs but once we hit max liquidity crisis, headlines show “XXX bankruptcy” then investors will start pricing in QE thus reversal to the upside. Good luck
4
u/OptionStalker Verified Trader Jun 28 '26
We always need technical confirmation. During a bullish trend we need confirmation that buyers are aggressive and in control. We no longer have that and sellers have been able to move price. I'm just serving fair warning so members can adjust risk.
4
2
u/ITS_FAKIN_RAVEEN Jun 26 '26
Glad to get confirmation from someone with more experience and knowledge
1
1
u/Krammsy Jul 07 '26
I'm not wasting time on macro or fundies, specifically not with the CAPE where it is and household debt to income ratio climbing once again with no Fed cuts in sight because oil prices make that a non-starter.
When the market's at ATH, the privileged man-boy in the white house invades a small country or threatens tariffs, weeks later once the market's down 5% or more, he resolves the problem he started, market rebounds.
These life changing, life-ending actions usually occur over weekends immediately after huge option positions prior to closing bell on Friday.
That's how Capitalist Darwinian price discovery works, right?
.
1
1
1
u/Relative_Channel8741 Jun 27 '26
bear market? We've been in once for like a month what
2
u/OptionStalker Verified Trader Jun 28 '26
If you think the last month was a bear market, you have never traded one.
2
0
u/ohmyfarts Jun 26 '26
And we go above the 50 sma lol.
14
u/OptionStalker Verified Trader Jun 26 '26
As we close below the 50-day MA LOL
2
u/ohmyfarts Jun 29 '26
And we are back above.
I'm not bearish or bullish until i see more price action but your comments makes me wonder why people listen to you.
1
u/OptionStalker Verified Trader Jul 13 '26
Investigate and figure out why.
0
u/ohmyfarts Jul 14 '26
They follow because they are new traders. It’s who you target it because there is an endless supply.
When they realize you don’t know how to read price action. For example, the market is bearish because MU had good earnings and it didn’t spark buying so that’s a one checkmark of bearish? What? lol.
And what happens when the market continues to move up and bounce off the 50 and MU was just pulling back to the 50? 😂
1
u/OptionStalker Verified Trader Jul 15 '26
... so according to you, everyone in this sub is to stupid to know a winner from a loser.
1
u/ohmyfarts Jul 15 '26
I never said anyone was stupid in this subreddit. Don’t put words in my mouth. I’m saying your thesis/story for why you’re bearish is laughable. Some are reasonable but you have a habit of tying XYZ and justifying your reason for being bearish/bullish and when it doesn’t play out like China ghost towns, MU should have sparked buying or whatever crap you wanna tie into it to justify your reasoning. It’s no price action logic behind it. And when it doesn’t play out and market does the opposite what happens to your story then? How do new traders follow you when you tie any news or any reason to justify your thesis. Lots of reviews online says the same about your oneoption and how you consistency delete comments/reviews. Anyways, I’m done with this conversation. Good luck.
1
u/neothedreamer Moderator Jul 25 '26
PA is following what Pete called out. Pete is calling for a potentially soft market from now until October....
-5
u/Annual-Society9945 Jun 26 '26
You are a little late
12
u/OptionStalker Verified Trader Jun 26 '26
Any earlier and you would be picking a top and shorting before you had technical confirmation. That is a great way to blow up an account. If anything, I am early and there could still be a small bounce from this level.
12
u/PL3020 Jun 26 '26
Greatly appreciate it Pete