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The Rally Continues

July 3, 2023
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Good Morning,

Friday SPY Closed Near the high of the day and got the bull breakout to another higher high. So by looking at the year-to-date price action of SPY you can clearly see we are still in a very powerful bull trend there’s still people getting short squeezed out of this market that have lost fortunes. And I think a lot of the price action today in SPY was simply the more recent traders getting caught offsides with that giant gap up and then getting squeezed out all day long. And that’s why we likely pushed out to a new high, so keep in mind when people are short selling the market, they’re going to put their stops above the previous high and that is likely where they’re going to get squeezed when price action starts to breakthrough those levels and they realize they are now taking on too much risk and need to buy back the stock which then makes the stock go even higher. So, this is just simply a chart of the candles of the year-to-date chart with no lines on the chart and nothing other than price action. Simply because that is all you need to identify a trend of higher highs and higher lows. Now if we put the indicators and the lines back on the chart, you can see with today’s breakout, we are starting to get a higher high breakout above 442 and the next upside cluster of price targets that I have is between 448 and 453 with that middle target right around 451. So usually when you get a breakout, you are going to squeeze the shorts, which means we could go a little bit higher. But I think there’s a good chance we will fill that gap before we go into the 450s and that gap is down there at 438.28. So we know gaps typically get filled, but we just have no idea when. So don’t rule out the possibility. We just go straight into the four 450s and then fill that gap at a later date. Once we hit those price targets, we never know exactly how the price action is going to move. That’s why we look at the chart every single day and figure out how to trade it and where to manage risk from. So right now if you want to stay bullish, you can manage your risk at the breakout at 442 or still using that rising 20 daily moving average, which means your risk is going to be right around 436 or the gap fill just above 438. So the strong support in SPY needs to be a higher low now and we’re going to go ahead and say we need to stay above 436. So I think that’s a great risk level if you don’t mind giving it a little more wiggle room today. We did go up on increasing volume, but I do think a lot of that was the short sellers getting squeezed, but higher volume is higher volume, nonetheless. So, we have a bull trend which means we are still expecting higher prices. Which means we cannot rule out the possibility the S&P 500 is trying to get into the 450 zone. Now pay attention to the rest of the indices because they did not break out today. So if they’re just lagging behind, you could still catch trades in them. But I think there is a chance the S&P 500 is playing some catch up and a lot of that is going to be due to the financials which finally got a close above the 200 day moving average today. We know the tech sector has been leading the way and the industrials have been very strong as of lately and we are just now starting to see some strength in the financials. So Long story short, this is a reminder it’s difficult to short a bull trend and if we were going to break out of the bull trend, we would have had that lower high into a lower low And as of today, we are breaking out to a higher high, which is instantly telling us. We are still in the bull trend and even though we could still at some later date get a pullback towards that support, right now is obviously not the day. And the only pullback we’re looking for right now is between 436 and 438 to fill the gap. If we were going to get the lower high, I believe we would have rejected below 368 and then came down here towards the breakout between 355 and 347. Obviously, price action is not doing that and we’re already gapping up above the breakout, which was that level right around 365. So at some point in this market, we could fill that gap, put in a higher low and then continue higher. Now keep in mind, if we get the pullback into the gap, you can’t automatically assume we’re going higher because there is the odd chance that SPY Is doing some type of false breakout move and it’s still going to get a pullback. So I’m not completely ruling out the possibility that triple Q’s don’t make a higher high and we still get this pullback back down towards 355 or possibly even lower, when you’re following price action, you need to manage your risk at the breakout levels and right now that breakout level in the triple Q’s is above 367. As long as we’re above 367, there’s no reason to believe we’re going lower and the moment we start getting weakness, we are going to see it in the price action and we’re going to start seeing the rollover effect. So far, we still have price action above all the moving averages, and we saw all of the moving averages with a positive slope, which means we are still in the bull trend. However, that can change very quickly and because the triple Q. Have not broken the higher high. We do want to assume there will be very strong resistance between 371 and 372, which means if you are still extremely bearish on this market and you can’t help yourself but to try to fade this reality, you want to manage your risk right around 372 because that’s the strong resistance the bullet need to breakthrough. Don’t they bold trend until it’s not and we simply need to let the price action do all the talking. Which means we need lower highs and lower lows before we say the bull trend is ending.

The Dow Jones. We were up .79% today and the Dow Jones also gapped up in closing at the high of the day, which means we have another gap to fill down here right around 341, which is also the breakout zone of that resistance. And we still do have the bull trend.

The Dow Jones has resistance now between 3:45 and 346 with a downside support at the gap. About 341 and the rising 20 daily moving average right around 3:40. If we break those support levels, we have critical support at 3:36. And as you can see, we have bullish price action above all the moving averages and a bull trend. And we did go up on increasing volume today.  we can’t rule out the possibility that Dow is trying to break out and go higher. On the Russell 2000 WM ETF, we were up .48% today. And the Russell did hit critical resistance at 188, which is the high we need to break to go hit the next price target higher at 195. As you can see, the small caps did fill the gap up, so they did get rejected from critical resistance and come down and fill the gap. But we do have the bull trend. As long as we’re trading above 184, above 184, you can stay on this bull and the next bull breakout will be above 188. And above 188, I think we start running higher towards 195. Now you can never rule out the possibility of a double top. So if we do get rejected from 188 and we come all the way back down here and break below the neckline at 180, that is going to be the bearish breakdown for the small caps. But again, that’s a long way away going from 188 all the way down below 180. And then we need the price action to confirm the breakdown to say that we’re going to lower prices. So this is still a bull trend, so be careful getting overly bearish. And if you want to get bullish, you can simply wait until we start closing above 188 on the arcades. Yeah, we’re up .8% today, but we did not break the resistance at 44.5. we need to break that resistance to go to the next price target higher, just below 46. Critical support will be right around 43. If we are Going to break down below 43, we’re likely coming back down towards 41.

VIX. Went up .3% on Friday I do think we are due for some type of fear because the market is getting a little greedy and a little complacent. And you can see the VIX is bunching up in the zone right around 13.5 usually when the VIX coils up like this at very low prices. That is eventually going to spring out and you’re going to see some type of fear and some type of panic. So even though we’re getting bullish price action, just be aware that the VIX is likely hinting we’re going to have a little bit of fear into the market, which could take us into the middle of July. However, an easier way to play this is simply wait till the VIX starts breaking out above 15 and that’ll likely tell us we’re going to pull ack as more fear enters the market.

On Bitcoin we’re currently flat, but we’ve been whipped, sawing all day long and intraday. We did hit that support at 29,500 and so far we’re bouncing off of it and we’re back over all the moving averages. But we’re still sitting below resistance at 30,500. If we break resistance, we go to 32,000 and 35,000, and if we break support at 29,000, we go down towards 28,000.

 On Amazon, we were up 1.92%. And as I continue to tell you, it has the bull trend with the price targets at 133 and 134. So stay bullish above 127 to 128 And if we break that then we could come all the way back down towards 121.

On Tesla stock, we’re up 1.66% on Friday and  the had great Sales and Production numbers this morning but momentum is starting to calm down and most shorts have covered, so we could come all the way back down towards the gap by 235, the breakout at 230 and possibly even the breakout at 215. Tesla rolling over on this level and your risk around the resistance between 262 and 268? And if we break it out, we can go higher towards 295. On Apple stock, we were up 2.31% today, and Apple did prove me wrong yet again because it broke above 190 and I thought that it wouldn’t. But above 190, we now have the gap to fill and we’re now outside the Upper Bollinger band. So I’m not really sure what’s going on in Apple because this is a very exuberant move to the upside above resistance. Stand outside the bonder band. So if I had to guess, and I know this is starting to look redundant, I do think we’ll at least come back down and retest that breakout before we go any higher. And the next upside target is up there at 197. So again, when you make predictions, you need to be OK with being wrong and that’s why we manage risk. And right now with Apple gapping up and closing outside the upper bounder band, I think there’s an increased risk that we get the pullback. But again above 190, we have the price target at 197 and this is still a very powerful It is going to be very difficult to get bearish on this market because the financials were one of the last pieces of this puzzle on the industrials, we were up .86% today, continuing into that bull trend and continuing to close at Higher Highs



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