The sectors

Biotech again had a great night, up 1.27% and health care also had a good night, up 1.04%. Were there opportunities in the market last night? There are always opportunities! This week we’ve made an incredible amount of money on IBB (Biotech) moving higher and have now locked in our profits. If you are interested in learning to trade options, start by watching my free video:

https://www.cashflowoptions.com.au/blog-webinar

All the other sectors were flat to down. Financials were down 0.62%, while technology, the biggest sector was dead flat.

The markets

The market was flat and all the major indexes were either flat or down. The Nasdaq, SPX and the Industrials were all dead flat. The two indexes we were concentrating on, the Russell 2000 and the transports, both went up slightly. The transports were up 0.29 and the Russell was up 0.38, but overall a quiet night.

The 30-minute opening highs and lows

The S&P 500 did break above the opening 30-minute high just before 11am. It stayed above it the whole day and then it eventually started selling off in the last hour of the market.

The Nasdaq broke above the opening 30-minute high around 12.50pm and stayed above that high until the last 20 minutes of the market’s trading time, then started to sell off a little bit. The Russell 2000 was range-bound until 12pm then it broke above the opening 30-minute high and stayed above it for the rest of the day.

Stocks that would have delivered big time last night

A good way to track healthcare is on the XLV index. It had a nice move up earlier in the day and then held that to around 1pm. After that it started drifting lower. A good health care stock to day trade last night was CNC. It did not have a huge early gap up. If I see a big gap early on in the day I’m not interested in trading it, but I like a bit of sideways consolidation in the first 30 minutes. If it is looking relatively strong I inspect the 30-minute highs and lows. CNC broke above the 30-minute high of $80.93 at around 10.30am and remained above it for the entire day. It moved all the way up to $83.81 at 1pm. That is a nice move within just a couple of hours. It would have been a great trade. Another good trade within health care was EVHC. It had the criteria I like – not a big gap up, but a break above its 30-minute opening range high, which in this case $59.05. It also had a bull flag. These are the sort of things you also need to be looking for. Once it broke out of its bull flag and above the 30-minute range high, it had a nice move up, reaching about $61. That would have been a great trade. Another good one was ILMN. It also had a bull flag and got above its 30-minute opening range high of $179.87.

Biotech was of course the other sector that moved up strongly, gapping up on the open. In terms of stock candidates, look at the movement of TSRO. Again it did not have a gap up but a nice consolidation and it had a bull flag within the first 30-minutes. At 10am it had a high of $145.59 but once it started moving up, just before 2pm, it kept going and almost reached $153. Last night there was definitely some potential candidates to make money on and I want to show you what to watch for – for example, bull flags and moves above the opening high. I want you to be able to take thousands of dollars out of the market at night!

I plan to close out my Biotech trades

As I said we’ve made an incredible amount of money on IBB (Biotech) moving higher. That is all well and good and we have now rolled up and locked in profit. We have riskless trades however Biotech is now looking extended. If you study the MACD (Moving Average Convergence Divergence), you’ll see that it’s completely over-bought. It is trading well above its 9 EMA. I would look to take profits at this point. It is right in the resistance area of 320-325. I’m looking to close my Biotech trades out. Once the MACD works off the over-bought we can again start to look for ideas back in this sector. I’d also want it to break above 325, but right now I’ve made a lot of money off it and I don’t want to be a hero, I just want to get my money, put it in my account, where it is safe, and wait for the next move. Wait for the ‘pitch’ – don’t try to wring every single dollar out of a trade. That is what the amateurs do. Remember, this market only rewards above-average traders. One of the ways to be above average is to be in tune with the market and listen to what it is telling you. Of course Biotech could still move higher – anything could happen – but I don’t care if it moves higher. I want to lock in my money and mitigate my risk. That is my job as a trader. I’m closing out my Biotech positions, which have been so good to me over the last couple of days. We may re-enter if Biotech gets above 325.

Going forward …

Right not there are no huge catalysts or impetus to move the market higher. The Nasdaq, which for so long has led the market higher, is not showing a lot of strength. It has also hit a resistance area, like Biotech. I can’t see anything terribly bullish or bearish that I’d be prepared to put a lot of money into in the market. If the Nasdaq turns down on the MACD on a daily chart, there could be some negative divergence. That would be something to keep an eye on, but for now I’m mitigating risk and taking my profits out.

Let’s see what tonight delivers then we can jump back in on Monday or Tuesday. Biotech has been so good to us, so it’s time to take profits and wait for the market to give us direction, then we will start looking for ideas again!