Headline-Driven Market Makes for a Tough Trade
Who has more influence right now, Russia or the Fed?
Technical Edge
NYSE Breadth: 65% Downside Volume
NASDAQ Breadth: 71.4% Downside Volume
It’s been an interesting situation with the breadth. On the up-days, breadth has been impressive. On the down days — particularly lately — breadth has held up.
Two things. First, despite big losses on both Thursday and Friday, neither NYSE or NASDAQ breadth gave us an 80%-plus downside when it easily could have given us back-to-back measures in excess of 80%.
Second, notice how breadth actually improved on Friday even though the losses were deeper. Something interesting to think about.
Game Plan
There are a million things going on right now and to look at the S&P and see it higher YOY is actually impressive. For now, inflation and the Fed are taking a back seat to the Russian-Ukraine situation.
I’m not a geopolitical expert. However, if there’s an invasion, stocks go down. If not, they go up. You don’t need me to tell you that, but that doesn’t mean it isn’t the truth.
If there is an invasion, well, it’s the most well-telegraphed one I’ve ever seen.
S&P 500 — ES Futures
Feel free to extrapolate this layout to the SPY.
The ES began this week under pressure, but has since bounced on some encouraging headlines out of Eastern Europe.
Right now, last week’s low at ~4393 is a line in the sand. While it cracked this morning, it’s holding now. If they sell the open, watch to see how this level is handled.
If it can’t hold as support or isn’t quickly reclaimed, the overnight low at 4354 is on the table (that O/N low came right at the 61.8% retracement of the current range (not shown, but interesting)).
On the upside, the 200-day looms near 4445 and above that, the declining 10-day and 21-day moving averages are near 4470.
Remember to go one step at a time, level to level.
Nasdaq — NQ Futures
Feel free to extrapolate this layout to the QQ.
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Individual Stocks & Go-To Watchlist —
Feel free to build your own trades off these relative strength leaders
It’s not what people necessarily want to hear, but I’m not in a huge rush to put on trades in individual stocks. I like sticking to the indices when volatility cranks up because the moves in the individual stocks can be too unpredictable.
We had some good trades last week and Friday had that really nice short in TSLA and a good long in XOM.
That said, here are the ones that continue to trade well on the long side.
Go-To Watch List
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