Chop Ahead of JPOW
The Nasdaq 100 led the session as pre-market news that AAPL will be using Google AI in their ecosystem pushed GOOGL and AAPL strongly higher, though both stalled. In fact, the whole market stalled again, and despite the 0.8% QQQ gain, only 40% of Nasdaq stocks advanced, and the market entered into a 3-day trend of net lows. There were only 3 net lows, but we still had 56 stocks make 52-week lows despite the index pushing higher.
Interestingly, markets showed low volume on this up day opposed to the increase in volume on virtually every recent down session. It’s also important to note that the Russell 2000 (IWM) closed negative.
Looking past the index, many stocks that have shown relentless strength underwent significant selling despite a fairly positive Nasdaq. Some include: WING, Bitcoin, CAVA, CELH, and SMCI.
After the bell, NVDA presented key information about their latest developments and their future plans. Initial headlines include info about a super chip that does super things, yet the stock is trading lower. This alone would not be of major concern, but this lack of upside despite “good news” shows that the market is unimpressed – and it’s all about what the market thinks and expectations.
I am by no means “a bear.” In fact, I purposefully practice positivity. But, we need an objective read of data, and it continues to disappoint. We are here to make money, not to simply put on trades, and losing money on bad trades is not what we want.
Indexes
QQQ Daily - We're still trading within the $433 to $448 range. Today’s session started off strong but faded as the day progressed. There isn’t much to do until the range is resolved. If we lose the $433.5 support, it would break the head & shoulders neckline, likely leading to a gap fill down to the $425 area. This would shift the short-term trend to bearish. As discussed yesterday, it would still be tricky shorting the market even if the $433.5 level was lost as a major supportive average (50MA) lurks just below and could lead to a powerful bounce attempt.
Key Levels
Resistance- $448
Support- $433.5, $425.5
SPY Daily - The S&P 500 has shown more strength recently, largely due to the performance of the Energy and Basic Material Sectors. However, this strength wasn't enough to hold uptrend support, which was breached last Friday. Ahead of every market correction, a 2-step sequence unfolds: first, the uptrend support is lost, followed by the loss of the 50MA. Now that the indexes have lost their uptrend support, the key focus is on how we react at the 50MA if tested in coming weeks. The bullish outcome would be a break above former highs which would reignite the uptrend.
Key Levels
Resistance- $518.5
Support- $508, $503
QQQ Daily - Throughout the 2020 Bull market, note the 2-step sequence that unfolded preceding each market correction.
QQQ Daily - Current Bull Market
Economic Calendar - FOMC meeting on Wednesday, Unemployment Claims on Thursday, and JPOW speaking Friday morning. Anticipating plenty of volatility throughout the week.
Gold Futures Weekly - Gold has been a major focus for me lately, given its breakout from a massive 4-year base.
Gold Futures Daily: It’s now pulling back to the short-term moving averages for the first time since the breakout a couple of weeks back. I’m looking to put on more exposure if we get a bounce in the coming days. The price action has been great, with heavy volume seen during the move up followed by a dry up in volume during the pullback. Additionally, it's been resilient despite the recent strength in the Dollar, which it typically moves inversely to, indicating technical strength. Couple ways to play it below...
GLD Daily: The most obvious way to play the bounce would be through the SPDR Gold ETF. Alternatively, you could consider leveraged Gold ETFs like the Proshares Ultra Gold 2x ETF (UGL) for increased exposure. My current long pivot is a break over $200.8 with a stop set at the low of the day or a close below the 10EMA, tbd.
GDX Daily: Trading the move through the Gold miners ETF is another option. I'm eyeing a long entry above $30.5, with stop conditions aligned as mentioned above, and this will apply across the remainder of my watchlist.
OR Daily: You can also consider individual gold miner stocks, which are generally considered riskier than the ETFs mentioned earlier. This is one of the strongest names in terms of technical strength. Long pivot set at $16.21.
AGI Daily: Another strong gold miner, pivot set at high of range $13.92.
Some trade ideas unrelated to the gold trade…
ANET Daily: pushing up towards base resistance. I'm looking for a strong move on heavy volume over the $293 pivot.
DKNG Daily: Showed a lot of strength today and closed just below the $44 pivot. I'll consider going long on a break above, with the first target set at the $45.3 area.
SNAP Daily: It wouldn’t make sense not to have at least one short setup on the watchlist. Snapchat saw a massive gap down on earnings and has since built out this base. The 50MA is now on a decline (bearish) and the 200MA looks to have been flipped to resistance. This would be confirmed by a breakdown from the base. Short pivot is a break below $10.48.
Tomorrows Focus List:
DKNG, BRCC, OR, ANET, SQSP, BLND, GFAI