Market Finally Tips Its Hand | Trading AAPL, AMD on the Rally
Booking some profit, but looking for a potentially larger move.
Technical Edge
NYSE Breadth: 65% Upside Volume
NASDAQ Breadth: 68.7% Upside Volume
After yesterday’s gains, we’re looking at more follow-through this morning. That’s great, because I have been really torn on the price action lately.
Specifically, looking at the SPX and Nasdaq charts, one could make a case in either direction.
Yesterday we talked about needing some leadership from the big tech companies and how the market was building on some positives:
“On the upside, we do have a higher low to work in all of the major U.S. indices. Cryptocurrencies are trading incredibly well and even ARKK held up okay yesterday. We’re not waving the green flag necessarily, but there are positives to start building on.”
Game Plan
Those are positives. But the market also had this look to it — a bear pennant — that could have made a downside break just as likely. I don’t think there’s anything wrong with saying “I don’t know what the market will do” and in this case, we really didn’t.
The pattern could have gone both ways and sometimes that’s just the way it is.
Now we see if the market can keep today’s gains. Tomorrow’s CPI report will be key as well.
S&P 500 — ES Futures
Feel free to extrapolate this layout to the SPY.
“On the upside, we have been writing about 4510 for a few days now. That’s the level to clear and hold.”
Yesterday we cracked the prior day’s low, then reversed and took out 4510. Firmly above the declining 21-day during Globex, let’s see if the ES can rally to the 4580 to 4586 area. That’s the 61.8% retracement of the current range, last week’s high and the daily VWAP.
Above that could give us a test of the 50-day moving average near 4600.
If we fade, I would love to see the ES hold 4510. Below 4500 and this can get a bit ugly again.
Nasdaq — NQ Futures
Feel free to extrapolate this layout to the QQQ, roughly speaking.
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Individual Stocks & Go-To Watchlist — AAPL, AMD, Energy
AAPL
Beautiful move off the 10-day and 50-day moving averages, as well as the daily VWAP yesterday. Apple gave us exactly the move we were looking for, with a 2x daily-up rotation.
Now up about 1% in the pre-market this morning, it will try to go weekly-up over $176.25.
This always leaves me a bit torn: Book profits on the short-term pop or stay long for a potentially larger move?
I personally favor booking ¼ to ⅓ of the position here and moving to a break-even stop-loss. I don’t want the market to take my gains back, but I want to keep a decent position on in case we can push $180 or so.
AMD
Apple is the freebie.
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Economic Outlook
The Big CPI report is due up Thursday, FWIW.
