Bulls Are In Control (Right Now)
Let's see if they can end the week on a high note
Technical Edge —
NYSE Breadth: 67% Upside Volume
Advance/Decline: 69% Advance
VIX: ~$19
It’s not clear what type of market we will have in 2023. However, what is clear right now is that the bulls are taking control as the ES cleared 4035, then 4050 and as the SPX cleared 4015.
That puts the market in the buyers’ control. That can change and maybe it will when the Fed’s meeting takes place next week (on Feb. 1) .
But here’s something that’s really important to take note of. As traders we must trade the market that’s given to us. Just because we “think” the market should go higher because of ABC or should retest the lows due to XYZ doesn’t matter.
What you think doesn’t matter.
Instead, we have trade the environment we’re given. If it’s controlled by buyers, we need to sniff out the strong stocks and buy the dips. If it’s controlled by sellers, we need sell the rallies and short the breakdowns. If you can’t short, stay on the sidelines. Build a list of the strong stocks holding up best so you know where to go when the environment starts to improve.
We need to be open-minded about the potential and ongoing developments in the market and we need to change gears when the market conditions change — even if “changing gears” means stepping to the sideline and waiting for a better environment that suits your trading style.
On to the S&P.
S&P 500 — ES
We cleared 4056, which opened the door to the 78.6% retracement near 4096. That’s still in play if the bulls can take control after the open.
On the downside, we really want to see the ES hold up over Monday’s high of ~4056 (which was this week’s high until yesterday). That’s also around the Globex low currently.
If it can do that, then yesterday’s 4077 high is still in play.
SPY
Yesterday played out nicely with the opening fade, followed by a strong rally in the afternoon.
Today, let’s see if the SPY can stay above the 402.65 to 402.85 area. If it can hold this zone, yesterday’s highs near $405 remain in play.
A break of that range could put $400 back on the table, but that is an area that the S&P really needs to hold.
With any luck, the 10-ema on the 1-hour chart will get a quick test and hold as support (same goes for SPX):
AQUA
Pretty simple stuff here. I am looking for a dip down to the $45.50-ish area, one that aligns with prior resistance and the rising 10-day moving average.
Individual Stock Setups — CVX, LVS, WYNN
I have never presented my charts like this, but if the bulls take control of the SPX today, I will be keeping an eye on some of the recently strong stocks.
In this case, I am looking at a few individual names to lead the charge, with CVX, LVS and WYNN shown above on the 1-hour timeframes.
If we get dips to the 10-ema on the H1 chart, I am looking to be a small buyer or call-option player if these names firm up around this measure.
Note: If the market is weak and can’t hold, then I will not trade these names. But lately, bulls have been in control and if they take control again today, I am looking for these stocks to show some resilience.
Open Positions
A note: After talking to some members, I want to make the setups a bit more clear. We are a trade-ideas service, but want to make entries & exits simpler to understand. We will be sending more updates, a few educational pieces and looking for a way to make our setups more clear in how we are managing them.
Numbered are the trades that are open.
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.
From this latest round, that includes TLT, DE and FSLR.
COP — Long from $119, the 2x weekly-up. Trimmed ¼ at the 50-day. Still watching $123.50+ for the next trim. Can technically raise stops to $118-119 or B/E, (whichever suits your style better).
If still long, $127 to $127.50 is the next trim spot
NKE — Down to ⅓ or ½ after yesterday’s $128+ Trim. Looking for $130+ to exit more/all. B/E stop.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
SBUX
TJX, ULTA, NKE
CAT
BA & Airlines — AAL, DAL, UAL
GE
WYNN, LVS
CAH
AQUA
MELI
AEHR
HCCI
MRK — weekly
FSLR
XLE — XOM, CVX, COP, BP, EOG, PXD — (Weekly Charts)
Economic Calendar
