A New Bull Market?
The S&P 500 is up more than 20% from its 52-week low.
Technical Edge
NYSE Breadth: 52% Upside Volume
Advance/Decline: 48% Advance
VIX: ~$13.75
The S&P 500 is “officially” in a new bull market, depending on what criteria you subscribe to. My belief is that we remain in a very mixed trading environment.
“Don’t fight the Fed” continues to clash with “don’t fight the trend.” Inflation has improved but remains elevated and we risk the ongoing inflation battle we had ~40 years ago. The 2-year/10-year Treasury yield curve has been inverted for almost a year and while some economic data is flashing “contraction,” other data remains constructive.
Where does that leave us? Well, I’m going to do what I always try my best to do: Not overthink “the macro” stuff and focus on the price action instead.
S&P 500 — ES
Remember, contracts are rolling as next week is quad-witch expo. As such, some levels may be different. Just extrapolate the pattern in that case.
If you’re on the June contracts, 4300-05 is key on the upside. Above it could open the door to the 4336 area.
On the downside, yesterday’s low at 4262.75 and the 10-day ema are key levels to hold as support.
For those onto the September contracts, it looks like this:
Upside Levels: 4350, 4375
Downside levels: 4326, 4300-05, 4280
SPX
The SPY and SPX finally tagged the 10-ema on the H4 chart and ripped higher off that level. Patience paid for the active traders around that mark. 30-40 points on the SPX is no laughing matter for those that catch it. For instance, the SPX 4275 calls went from a low of roughly $3 to a high of almost $23 during the session, a 7.5x return.
As for today’s levels:
Upside Levels: 4300, 4323, 4337
Downside Levels: 4275-79, 4264, 4250, 4230
SPY
The SPY doesn’t “have” to do anything, but it would be helpful if it would give us a range break below $426 or above $429.
Upside Levels: $429.50, $431, $433.50
Downside Levels: $426, $424, $423 (gap fill)
NQ
Upside Levels: 14,750, 14850-60
Downside Levels: 14,550, 14,420-50
QQQ
Excellent response right off the open for the QQQ. Let’s see how it handles the $355s. Above this zone puts the $357.50 highs in play, then a push toward $360.
On the downside, below the two-day low (~$348.20) and last week’s low are in play at $346.50.
CVS
A possible short setup here in CVS as shares retest the prior Q1 low, along with the 50-day and 10-week moving average. If this was flipped — a retest of the Q1 high and the 10-week and 50-day moving averages — we would be buyers.
First targets $70.50 to $70.70 - small trim (20% to 25%), ~$70 real trim (likely down to 50%), out 2/3 of the trade if we see $68.50 to $69.
Stops are a little different. $72.50 to $73 if running tight. $74 is trading w/ a loose stop.
if using puts, I would price for full loss.
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
** = previous trade setup we are stalking.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM and AMZN.
PATH — dipped right into the 10-day ema and prior resistance between $17.50 and $18. Yesterday was volatile. Investors can either size a little smaller and use a stop-loss closer to $16 or play it tight and use $17.
Upside target is the same either way: $19 for first trim (⅓), then $19.50 (down to ½), then $20 (down to ⅓).
Can trim small (20% to 25% of position) if we see a move over Thursday’s high.
QQQ — The other day, we flagged the long setup on QQQ. If you didn’t get it yesterday, that’s okay. It looks like bulls will have a chance this morning.
Long from ~$349. Trimmed $352 and $353. Down to ½ or less, with a break-even stop.
** TLT — I don’t know if we’ll fill the gap at $99.65-ish, but I will get long if we trade the mid-$99s and it holds as support. Still Stalking
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
Growth stocks ARKK — DOCN, PATH, CFLT, SHOP
LLY, CAH
AI stocks — NVDA, AMD, AVGO, ADBE, SMCI
Mega cap tech — MSFT, AAPL, META, CRM
Select retail — CMG, ELF (notice how they still sold LULU post-earnings)
Homebuilders ITB — TOL, KBH, DHI
BRK.B
ABEV, DXCM (on breakout watch)
Relative weakness leaders →
PYPL
MET
CF, MOS
PFE
EL, FL, DG
Economic Calendar
