Multi-Day Dip? Check. Now What?

The S&P is wobbling on Friday.

Technical Edge 

• NYSE Breadth: 30% Upside Volume

• Advance/Decline: 33% Advance

• VIX: ~$13.50 

  • Traded $12.73 yesterday! That’s the lowest it’s traded since pre-pandemic in early 2020 (i.e. with stocks at ATHs)

A quick note on the S&P, which is down about 35 handles or 0.80% in pre-market trading. We finally got our multi-day dip down to the 50% retracement and 10-day moving average. That set up a great buying opportunity off the open. 

While yesterday proved fruitful for short-term buyers, the rug is being pulled a bit this morning. Traders can’t expect to simply buy the dips to the 10-day in the S&P every week and get away with it. 

More or less, if we hold yesterday’s low, it will be an interesting setup next week. Regardless, I am keeping an open mind. Further weakness could bring in the prior breakout level and 21-day moving average (I’ll annotate this below). On the upside, a move above Thursday’s high opens up more upside. 

S&P 500 — ES 

Above yesterday’s high and the Globex high (~4427) opens up more upside. A break of 4393 that’s not quickly reclaimed opens the door down to ~4350. 

• Upside Levels: 4426, 4440-45, 4455, 4480

• Downside levels: 4393-4400, 4378-83, 4345-50

SPX

• Upside Levels: 4382, 4400, 4412, 4425-28 

• Downside Levels: ~4350, 4330-32, 4300

SPY

Use yesterday’s $433.60 to $436.62 range to navigate today’s trade. 

• Upside Levels: $436.60, $439-$440

• Downside Levels: $433.60, $432.75, $429.50 to $430

NQ

If support does not hold in this area — the 50% retrace and the 10-day ema — then we could be looking at a dip into the 61.8% retrace near 14,830, which is also into that prior resistance zone. 

• Upside Levels: 15,125-150, 15,225, 15,282

• Downside Levels: 14,950-970, ~14,830

DOCN

For those that are leaning quite bullish, DOCN may be presenting an opportunity. A quick 6-day dip down into the prior breakout zone, Q1 high, 50% retrace and 10-week moving average. 

Gave us a nice doji stick yesterday. Aggressive buyers will buy into the low-$38s. Conservative buyers will wait for a daily-doji-up over ~$40. 

I would go with a half position in DOCN because it will be susceptible to ARKK and the broader market action, but it has been a recent leader on the growth-stock front. If this group falters, so will DOCN but if it bounces, this name will go for the ride. 

GM

Nice pop in GM has me looking for a daily-up over $36.96 — call it $37 — today. That would come off the 10-day and 200-day moving averages. 

If we get it, I would use a $36 to $36.25 stop-loss. First target is $37.50. 

Open Positions 

• 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.)

• ** = previous trade setup we are stalking.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM, AMZN and CVS. 

1. WMT — long from $154 — Trimmed ⅓ trim at $156 to $156.50, 

   1. Trim more down to half at $156.35+, ideally $157+. Break-even stop

2. INTC — Not the best start. Long from $33.75-ish. In hindsight, ~$32 was a better buy spot than $33.50-$34. Here we are though, near this mark now. Let’s see how the opening hour or two does. $32 is the line in the sand. I am considering a small “add” but will manage risk tightly from here. Sub-$32 is a no-go for me if no bounce materializes from this area. 

3. ** AMD — Watching yesterday’s setup for a potential buy

Go-To Watchlist 

*Feel free to build your own trades off these relative strength leaders*

Relative strength leaders → (List is growing long!)

1. Growth stocks ARKK — DOCN, SOFI, UPST, SHOP

2. LLY, CAH

3. AI stocks — NVDA, AMD, AVGO, ADBE, SMCI

4. Mega cap tech — MSFT, AAPL, META, CRM

5. Select retail — CMG, ELF, LULU

6. Homebuilders ITB — TOL, KBH, DHI

7. BRK.B

8. ABEV, DXCM (nice breakouts)

9. Cruise stocks — RCL, CCL, NCLH

10.  DAL, DT, AMAT

Relative weakness leaders → 

1. PYPL

2. MET

3. CF, MOS

4. PFE

5. EL, FL, DG

Economic Calendar

Three Fed Heads today, but keep in mind, none of them are voting members this year. 

X

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!