The markets

Last night the market was muted. There was not a lot happening. The Nasdaq was up the most, 0.25%, but not showing a lot of conviction. The other indexes were flat or slightly up, with the exception of the transports, which were down 1.3%. I wasn’t surprised that the Nasdaq stalled. It had had five up-days and was in a resistance area. It was also becoming a little over-bought. Let’s see what happens now. Will the Nasdaq stall again tonight and then perhaps break through resistance on Monday or Tuesday? Or will it stall and have a move down, as it did in June? Let’s wait and see what happens. It is at an interesting point, and tech has also slowed.

Russell 2000 is looking enticing

The Russell 2000 has been consolidating and going sidewards for quite some time now. If you look at the daily chart, you will notice it has a nice squeeze but that hasn’t triggered yet – however I do like the look of it and I may even buy calls on the IWM. The earnings season is coming up and many analysts are expecting a good, positive earnings season. If that happens then the Russell 2000 will be an index that benefits considerably. The squeeze provides added incentive to enter this trade. A squeeze coupled with a good earnings season could see the Russell 2000 move up strongly. But for me, I would also like to see the Russell 2000 break up above 143, the all-time high. If it gets above 143 with the squeeze and a good earnings season, it could move up substantially!

If you would like to start trading options before the next earnings season starts, begin by watching my free training video.

Transports and Biotechs are also tantalising

A good way of looking at the transports is on the IYT index. If IYT gets above 175.50, could it have a nice run up? Definitely! Meanwhile biotech has worked off its over-bought condition and the MACD is turning up. If it can get above the 324 to 325 level, it could also have a big move up as it did in mid-June.

The Russell 2000, the transports and biotech all look interesting. If they break through their resistance areas, they could have a decent run higher.

The sectors

Biotech was up the strongest of the sectors yesterday, up 0.76%. A biotech stock that did well was ALDR. It broke the 30-minute opening high at 12.05pm. $11.20 was the price. From there it moved up strongly for the rest of the day. Using the 30-minute opening high and our other rules, you could have done very well on ALDR.

My first earnings trade pick

Earnings season is fast approaching and I already have an earnings trade to share with the elite students tonight. The elite students and I will also manage our other positions today. This is crucial. It is not the money you make, but the money you keep. Anyone can place a trade, but the follow-through is essential. You have to manage trades in accordance with risk management principles.

I am anticipating a quiet night tonight. Always look at the European and Asian markets are doing. They open before the US market. If they open strongly, they may stimulate the US market to do the same. I advised you to look at the European market yesterday. The European and Asian markets were flat yesterday, which was our first indication that the US market would be muted. The futures market is also looking flat today.