Oh what a mess this Federal Reserve has put the stock market in!

Oh I know, S&P 500 and the Nasdaq are both positive on the year, and the latter is raging at new all-time highs, day after day practically. But what happens when the Fed balance sheet goes back to "normal"? 

We lived a life time in the first half of 2020, what does the second half have in store?

I hate to say that there's no way that the second half of this year could be crazier than what we have experienced so far in 2020, but the mere statement will likely doom us all to experience exactly something even crazier. 

There's a number of stocks that I have had to take off the watch-list - stocks like Amazon (AMZN) and Tesla (TSLA) because taking positions in them at this juncture is a bit insane from a reward-to-risk stand point. I want to, instead, focus on the stocks that offer the best return for the risk one takes on. 

The bullish watch-list continues to shrink in number simply because of how overstretched most of the charts are at this point. Though, if they can get going, stocks like Roku (ROKU) and Home Depot could be setting up for another leg higher. 

Here's my watch-list of long setups I am following:

For similar reasons, quality short setups are far and few between, though I have seen a slight uptick in them in recent days, as there have been some significant divergences emerge on the indices and market internals. 

Here's my watch-list of short setups I am following:

Finally seeing some rational thinking lead to profit taking today.

This is the most selling that I've seen in about nine trading sessions when the S&P 500 gave up about 188 points to the downside. So far today, it doesn't look like it will be as bad, and heck, we might even seen the bulls try to buy the dip here in to the close. I don't expect that, but you never know. 

Europe sold off big today, and we are trying to follow suit. There was also a key break in SPX to the downside today as well. It was a channel that the market had been popping all around since June 16th. 

I've only added one additional short position to the portfolio, because 1) Don't count the dip buyers out just yet 2) Better to test the water with one foot, rather than two, lest you sink. 

Below I've combined this post to include long and short setups. Careful in both direction because the market is at a crossroad here - will the dip buyers and FOMO traders again take the slightest pullback and buy it up again in the face of the worst social and economic news in decades?

Here's my watch-list of long setups I am following:

Here's my watch-list of short setups I am following: