It’s Fed Week and it’s continuing to be a headline-driven market with multiple news stories dominating the market. Be mindful to size properly during these environments, and understand that in these volatile times the bears and bulls could easily switch and take control.
Happy Monday, traders! I’m up early this morning watching the futures, as the markets are currently trading lower on Russia vs Ukraine news. We have some clear levels of both support and resistance to keep an eye on today, so let’s take a look!
After a big short covering rally last week, there’s some key levels of resistance ahead to keep an eye on! Whether we can break above these levels or not will likely set the tone for the markets next move. Let’s dive in! If you think the market has put in a long term bottom, let me know why/what you’re seeing!
After a nasty gap down on Thursday morning, we saw the markets proceed to absolutely crush shorts all the way into today’s close. Does this change the bigger-picture structure of things? Let’s dive in and take a look!
The market finished the Friday session with weakness which could open the door for more downside next week…
Despite the bearish structure of the indexes, we’ve seen a handful of nasty short squeeze rallies, which are to be expected in a downtrend. The key, and what matters most, is that up to this point these bear market bounces have not shifted the structure of the indexes, sectors, and leading stocks. In other words, everything still looks bearish for the time being.
Heading into the weekend, the S&P 500 (SPY) has bearish squeezes on the weekly, 2-day, daily, 4-hour, 2-hour, 1-hour, 30-minute, and 15-minute time frames. When we have bearish structure and momentum on the weekly and daily charts, these clusters of nested squeezes on lower time frames can serve as a great gauge of the next directional move.
We’ll be watching for the “domino effect” that can take place when a lower time frame squeeze fires short and triggers the other squeezes to do the same. This release of energy across multiple time frames can lead to a lasting move in either direction.
While the squeezes can help, we will have to see the SPY break support in order to get a meaningful flush into new lows.
For now, $420 is the key level of support to watch on the SPY next week. If that level can break as the squeezes fire short, the market may begin its next leg toward new lows.
But, if $420 holds as support, there is always the potential for another vicious short squeeze into resistance.
We have open short positions in IWM, AMZN, INTC, and long positions in energy names like EOG and DVN. In our Sunday watchlist video, we’ll break down a few of these setups in detail, and the entry/exit levels we’re using for our swings.
Stay Focused!
After an uneventful core Consumer Price Index (CPI) report on Thursday morning, the market continued its indecisive chop. With new headlines daily, the market and even the world doesn’t necessarily know what to do or think.
These are the periods of time when the market might chop between ranges, so it’s even more important for traders to focus on the technicals and fundamentals that keep us successful in all environments.
We’re still focusing on the same zone on the S&P 500 (/ES) from $4,212 to $4,260. On Thursday, the market was still stuck in this range that is our “line in the sand.”
In the video above, we’ll cover a few scenarios that are possible for the rest of the week and review setups on AMZN, SHOP, and GOOGL.
Stay Focused!
The S&P 500 (/ES) finally broke down the major zones we have been covering, causing the 4-hour squeeze to fire down.
After a break last week, the market is starting to look vulnerable again. If the ES stays under the $4,260 to $4,212 range, we can see a continued flush this week toward $4,100.
Our main focus will be on capitalizing on the indexes and setups on SHOP and NVDA.
Here is our focused list:
SHOP — If SHOP stays below $585 to $574, it has a chance to see $530 and then $500.
NVDA — $208 to $206 is going to be a major level that can cause a nice bounce, or we can see a break down toward $195.
Stay Focused!
The S&P 500 (SPY) is still printing a bearish weekly squeeze and was rejected at the daily 21 exponential moving average (EMA) on Friday.
For this weekly squeeze to fire short, the daily chart will need to break below the key level at $430. Until the SPY can break this level, this will be our line in the sand for the next flush to new lows.
In times when the market needs to crack through a key level of support or resistance, there tends to be many squeezes letting out energy.
The main focus for next week will be on the 4-hour squeeze as it is releasing a build-up of bearish momentum under key support. Be prepared as this release of energy could send the rest of the market to new lows.
In the video above, we’ll review the bigger picture trend and pick out spots wisely for potential shorts on names like IWM, AMZN, and SNAP.
Stay Focused!
While the bigger picture of the indexes continues to look bearish, this week was mostly a chop fest with some violent back and forth action in a wide range.
When will the market break free of this raging chop fest?
Both the S&P 500 (SPY) and Nasdaq (QQQ) rallied to their daily 21 exponential moving average (EMA) this week and were quickly rejected. Typically, this type of rejection at the mean would lead to the indexes rolling over and eventually making a new low.
While that is the move we are looking to see unfold, the SPY and QQQ have to break through support before things can flush lower.
While the QQQ broke the January lows on Friday, the SPY held up at its critical $430 level of support. Heading into next week, should this $430 level fail to hold as support, we would look for the markets to quickly start trading lower, likely in an ugly fashion (or if you’re short in the market, a beautiful fashion).
Often we need lower time frame squeezes to help nudge the market through key levels of resistance or support. In this instance (see chart below), there is a big 4-hour squeeze in the SPY futures. Should it fire short, that could pack the punch needed to finally wave goodbye to support at $430.
Keep a close eye on the $430 level next week, and expect some nasty downside should it fail to hold and move into a potential new low.
At the moment, we have short positions in AAPL, AMZN, IWM, and SNAP. We took profits on our DWAC long and UBER shorts this week and are ready for the next clean trade.
Stay Focused!
Despite world and economic turmoil, the structure of the stock market has remained relatively unchanged.
We’re anticipating the Nonfarm Payroll (NFP) report on Friday morning to see if that helps the bulls take back control.
The market has struggled to find direction in the chop. The S&P 500 (/ES) has failed to break through the $4,400 level, which also happens to be the 21 exponential moving average (EMA).
There are multiple squeezes forming across the board. We’ll use the 4-hour squeezes on the /ES and Nasdaq (NQ) as a compass moving forward.
As for our focused list:
GOOGL – Watching the 4-hour squeeze to the upside, but it needs technology’s support. We can continue to buy dips low as the market pops. To fire the squeeze to the upside, GOOGL needs to break $2,726.
NVDA – Printing a 4-hour squeeze. NVDA keeps bouncing between its daily mean and the 200-day simple moving average (SMA). We will look to keep buying low and shorting high until one of the ranges breaks and the squeeze can fire.
Stay Focused!