Good Morning,
It pays to stay nimble. We covered all of our shorts last night and at the premarket open at 4am
This morning. We covered the final two positions NVDA and TSLA early this morning at 434.10 and $245.95 respectively. If you’re bearish and you’re only interested in shorting and you don’t want to try to buy off support, then you’re looking for the break of 420 to tell us that we’re likely going down towards that gap fill which is just above 407. And that is also going to be this larger head and shoulders downside target. So that is a valid price target. If we cannot hold above 420, now just going back to review the price action below 430, when we had that breakdown, there was always a very good chance we were going to 420. Now that we’re at 420, if you’re shorting the market, I would highly suggest covering for profit because there’s a very good chance even if we get a bearish scenario that we’re going to see a bounce from here. That could take us all the way back into the four 440s, even if we are going lower towards the low 400’s. So 420 is a great level whether you’re a bull or a bear. This is a critical level that every trader should have on their trade plan and it is going to be very important whether or not we are above or below this level. Longer term swing traders, this should be your focus right here at SPY 420. And then for the short term, we’re looking to see if we bounce from 420 to take us back up towards 427 and on to 430. In order to get bullish, we need to get back over 430 and then start forming higher lows and higher highs as we March higher towards the four 440s. And eventually we will need to break out of the down trending resistance trend line. So yes this is still a downtrend on the daily chart but on the weekly chart there’s still reason to believe it could be an uptrend and that’s going to depend on whether or not we can hold around 420 now below 420 we likely flush down towards 417 and then the next level at 414. But I do think we need a bounce in the short term before we can go any lower. However, let the price action do all the talking.
On the NASDAQ 100 Triple Q’s, we were down 1.75% yesterday and the first thing I noticed with the Triple Q’s is how they are still relatively the strongest. Every index made a lower low yesterday except for the Q’s. Also, if you compare it to the low from middle of August, we are barely breaking down below that level and today we actually closed right on top of it. So, when you see relative strength in the tech sector, it’s very difficult to think that everything is crashing and burning. But there’s always the chance that triple Qs are lagging as I mentioned the other day and maybe they will start to break down soon, but they have not broken down on the chart yet. The breakdown is going to require a flush down below 355 and then we should easily get down to 347. And then if the bulls can’t hold 347, we start down lower towards the three 330So 355 is still the critical support and if we break it, the equivalent of SPY 420 on the Triple Q. To be this level at 347. So you have two critical support levels at 355 and then 347. Now if we start to bounce from 3:55 and we break this high at 361, this will look like a double bottom breakout which means we should easily fill the gap above 364. But more than likely we would go the full measure, move higher into the 370 resistances. So watch these critical support levels because we’re going to know very soon. Whether we bounce from them or break down and your trade plan should be prepared for either scenario.
VIX was up another 12.39% yesterday and the VIX did spike back above 18 to as high as 20.35 VIX 20 is where we have been seeing the VIX getting hammered So if the VIX starts breaking above 20, we are very likely going to be ending the bull market which is going to be that confirmation with SPY breaking down below 420. So we’re very close to knowing if this is just a correction. Within a bull market or if the bull market is over with and we’re going back into a bear market we are going to know this information very soon.
TSLA was down 2.02% to close at $246.53. TSLA did not hold above that resistance test which was that retest of the breakdown at 252 and we’re right back down to the support zone in the 240’s if we can bounce from the 340’s and break above 255 look for the gap fill above 262 and then above 262 we have strong resistance at 275 we have the bull break out more likely going into the 300’s with the gap fill below 290 and resistance at 296 if we can’t hold support in the 240s we’re likely going to 230 and then the gap fill below at 218
Yields have moved up significantly and just to show how stretched this move is, if you look at The 30 year yield versus its 200 day moving average, we are now trading nearly one percentage point above the 100 day moving average, which goes to show that this momentum has really surprised a lot of market veterans as to just how quickly yields have risen In the last few weeks
Alone so keep an eye on the 2 year and 10 year as I mentioned yesterday.
I hope everyone has a great trading day.
