Reseting After A Monstrous Rally
The ES and NQ had ranges of almost 190 points and 1000 points, respectively.
Technical Edge
NYSE Breadth: 52% Upside Volume
NASDAQ Breadth: 78.9% Upside Volume
Tech was our leader yesterday, plain and simple. Yesterday I said my guess is that they will buy the open and look to sell it later. Only “later” never came as they couldn’t generate any meaningful strength on the downside.
At one point, the NQ futures were down 3.57%, rallied almost 1000 off the low and closed higher by 3.4%. From the low, it rallied more than 7%.
Game Plan
Yesterday I wanted to stick with the indices as my main trading vehicle and I’m keen on doing it again today with the session’s gap up.
My strong preference is to unearth multi-day/multi-week swing trades and I wish I could in this tape. I know that’s what you all are used to, too. But in this environment, we must take what we can get until better times arrive. Cheers, and have a great weekend!!
S&P 500 — ES
Feel free to extrapolate this layout to the SPY.
The January low was the highest upside level I listed yesterday, more than 100 handles above where the S&P was trading at that time and I did not think we would need to map much higher for the levels yesterday. Well the market proved me wrong there!
The upside levels are:
4321 — last week’s low
4344 and 4401 — 50% and 61.8% retracement of the current move.
Downside levels of interest:
4290 — Thursday’s high
4227 — O/N low
4212 — January low
4196 — 50% retracement of Thursday’s range
Nasdaq — NQ
Feel free to extrapolate this layout to the QQQ.
The upside levels are:
14,143 — 50% retracement and the 10-day. Key area
14,367 — Q4 Low
14,406 to 14,420 — 61.8% retracement and declining 21-day
Downside levels of interest:
13,983 — Thursday’s high
13,760 — O/N low
13,706 — January low
Gold
That pullback in gold really felt good to nail yesterday, as it faded from resistance. So far, it’s holding exactly where it should: The 10-day moving average and the Q4 highs. In fact, yesterday’s low was within a dime of the latter.
Now we want to see it stabilize above the 10-day and then rotate higher. We’ll see if it needs more rest though.
Individual Stocks & Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Today is tough. If you are not long from yesterday in some capacity, it’s hard to buy today into a gap-up, as it leaves such a wide risk level.
I think the thing we need to look for is a big upside breadth day. If not today, sometime next week. We need the return of significant demand and institution support in the market.
Absent that, many of these rallies could turn out to be selling opportunities. As good as yesterday felt, the trend is still to the downside. Invert almost any stock’s chart and rather than a rally into resistance, it would look like a dip into support. That’s not constructive for bulls yet.
Go-To Watch List:
TU
COOP
MAT
ABBV
Gold
CCK
KO
BRK.B
H and MAR
MAT
V & MA
MKC
TECK
UPST — one of the few growth stocks actually working