Here's How Bulls Can Remain in Control

Trading AAPL, STLD, BRK.A, AVGO & More.

**If you missed Friday’s post comparing ARKK to the Nasdaq from 2000 to 2003, I urge you to give it a read. It’s very interesting!**

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Technical Edge — 

• NYSE Breadth: 71.3% Upside Volume

• NASDAQ Breadth: 45.7% Upside Volume

Breadth is not the end-all, be-all indicator in trading — no indicator or measure is. But it can often hold some clues. 

Shortly after noon, the S&P 500 — be it the ES, SPY or SPX — was down about 80 basis points and probing the low-of-day. At that time, I noted that breadth was still reading 60% upside volume even though the market was near the low. 

Now that doesn’t mean we were guaranteed to rally necessarily, but it’s one factor that had me long — granted my cost basis was almost 15 handles higher on the ES, at 4514 — and looking for some kind of push higher. 

Simply put, the breadth reading was telling me there was demand below the surface; not waves of sellers hitting every rally. If it were 70%+ downside volume at that point, I think the action would have gotten worse throughout the session, not better. 

Game Plan

I want to make three points coming into today’s session. 

1. I don’t like to come into Monday morning with a firm bias, because it’s the first trading day of the week and I like to be flexible with my positioning. 

2. We’re finally seeing some solid setups in individual stocks. Now that volatility has come down, we aren’t being as limited to the indices as we were in Q1. 

3. It’s still very tough to decipher if we’re in a “dead-cat bounce” and rolling over, or at the start of a new and strong uptrend. 

For now, the bulls have control. But that could change at any moment. 

S&P 500 & ES, AAPL, STLD, BRK.B & Trade Updates

• Feel free to extrapolate this layout to the SPY

On Thursday and Friday, we were looking for the S&P 500 to cough up about 100 points and find support in the 10-day to 200-day moving average area. It gave us 95 points before it found its footing. 

For now, bulls remain in control of the short-term trend. On the upside, I’m watching the 61.8% retracement at ~4552. Above that puts 4595 back in play, followed by last week’s high near 4637.

Upside levels: