Friday or Fry-Day With Jobs Report on Tap?
Can the bulls build on Thursday's 80%+ upside day?
Technical Edge —
NYSE Breadth: 82% Upside Volume (!)
NASDAQ Breadth: 83% Upside Volume (!)
I really wanted to do a video today, but I will wait until this short week is over because today is the monthly jobs report! Nothing is worse than doing an entire video and getting it out before the open just for an econ report to completely shift the entire market.
Yesterday, we said:
“I’m not saying that we’re guaranteed the low is in for the moment, but I’m saying that if traders do want more upside from here, they must also realize the market needed to rest a bit after big upside thrusts.”
We got that thrust on Thursday as the S&P tagged the prior session’s low and reversed higher in a big way.
Two things can be true at the same time: We could see a notable upside move and the low could not be in. That’s just reality and it’s why we have to trade what we’re given.
Game Plan — S&P 500 (ES & SPY), Nasdaq (NQ & QQQ), AMD
S&P 500 — ES
As good as yesterday’s session felt for the bulls, last week’s high continues to keep a lid on the action at 4168.
If the ES can clear this level, it quickly puts 4175 to 4180 in play, then 4200 to 4220. Those are some pretty tight ranges, but that’s the situation.
On the downside, there are a few levels sticking out. In the short term, look at the 1-hour chart below.
I have my eye on the 4125 zone, +/- a couple points. Not only was that resistance but it’s also the “halfback” of yesterday’s range as noted with the 50% retrace.
In the short-term I want to see how that level is handled. As for the bigger picture, the ES has hammered out a nice two-day low in the 4072 area, along with the 10-day moving average.
Losing these marks does not bode well for the bulls.
Daily-up over $417.50 and the 10-week moving average puts $420 to $421 in play, followed by the 50-day near $424.50.
On the downside, it’s pretty simple. $407 and the 10-day are key. Below $405 and the momentum starts to shift back toward the bears.
Nasdaq — NQ
The NQ has been trading a little better on the long side, as it holds above the weekly-up rotation level of 12,720.
Bulls want to see the NQ hold above this level, which would keep yesterday’s high in play at 12,904. However, they need the 12,440 level to hold, along with the 10-day. Lose this level and we could be looking at more downside.
If the NQ can turn today into a FryDay, it could set the stage for a rally into the 13,350 to 13,400 area. Just be mindful of the 10-week moving average up at 13,025.
Note how the NQ is in a prior support area, which had buoyed the index until early May. Now we see if this level can be reclaimed (more momentum for the bulls) or if it’s a support level turned into resistance (more momentum for the bears).
Nasdaq — QQQ
I would love to see the QQQ hold $309.25 — last week’s high. If it can, it keeps $312 to $314 in play. Above that (and daily-up) opens the door to the 10-week moving average near $318.
Kudos longs, as you were prepared for the setup in AMD!!
We flagged this one Tuesday and have been watching it all week. AMD held the levels it needed — mainly the $100 mark and the 50-day — then went monthly-up over $104.55.
That sent us right to our first target between $109 and $110, where we found the 61.8% retracement. We trimmed there and now sit in a situation with a break-even stop-loss.
Let’s look for $115 to $118 next (the 200-day moving average). Ultimately, I’d love to ride the last chunk of this trade to the $125 area, but let’s just go one level at a time. Cheers!
Go-To Watchlist — Individual Stocks
CTVA — Still watching this setup as a possible trade.
XLE — Watching for potential dip-buy into the 10-day ema.
XOM — Also watching for the same dip as XLE.
AR — Setup still intact. Stalking it
*Feel free to build your own trades off these relative strength leaders*
Numbered are the ones I’m watching most closely. Bold are the trades with recent updates. Italics show means the trade is closed.
We have been spanking the very select individual trades we have taken. For that, I’m super grateful! It shows that discipline wins out in a tough tape.
AMD — Weekly-up at $104.55 triggered, First target achieved at $109.50. → Now look for $115 to $118 next & breakeven stop-loss.
DXY / UUP — Can trim into the $27.50 area as the first target. More aggressive longs can look for $27.70 to $27.75 first if they’d rather, but ¼ to ⅓ here makes sense to me.
Relative strength leaders (List is cleaned up and shorter!) →
These three are on watch for dip-buys:
XLE / XOM