Trading a Big-Breadth Rally | SHOP, OXY, ZTS
Market continues to punish stubbornness, not reward patience.
Technical Edge
NYSE Breadth: 79.95% Upside Volume (!)
NASDAQ Breadth: 86.9% Upside Volume (!)
We had a strong breadth day in the market yesterday, but for it to really mean anything, we will need another 80%-plus upside day today.
Game Plan
This market is not rewarding patience, it’s punishing stubbornness. In that regard, I’m going to stick with some of yesterday’s suggestions: Smaller position sizes, shorter hold times and faster exits. We need to stay ahead of the wave, not trapped in the churn.
S&P 500 — SPY
Feel free to extrapolate this layout to the ES.
The 4467 to 4470 area really held in as resistance for the ES on Tuesday and the upside levels remain the same as yesterday. For the SPY, the upside levels are:
$446.28 — yesterday’s high
$446.60 — puts it over the 50% retracement of current range, as well as the 10-day and 21-day moving averages
$450 — the 50% retracement of the full range
Downside levels of interest:
$443.18 — yesterday’s low
$441.60 — gap fill
~$439 — last week’s low
Nasdaq — QQQ
Feel free to extrapolate this layout to the NQ.
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Individual Stocks & Go-To Watchlist —
*Feel free to build your own trades off these relative strength leaders*
Guys & Gals, we must know the climate we are in right now. With the VIX still in the mid-$20s, multi-day swing trades are difficult.
It’s why we were quick to trim our position in ABBV yesterday morning.
It’s why last week we were quick to reduce AMD and AAPL, even though they looked great from our initial entry. To repeat, this market is not rewarding patience, it’s punishing stubbornness.
Given this observation, my trims may move from ⅓ of the position up to ½ for the time being. Here’s the go-to list & notes, followed by some charts.