The volatility train isn’t stopping yet.
We have a light week in regards to the economic calendar, with the main event this week being the Consumer Price Index (CPI) on Thursday morning. As traders, we want to be aware of this index because it is a gauge into inflation that could affect the market.
The structure of the market is starting to shift to the bearish side with tensions rising between Russia and Ukraine. This could lead to more uncertainty and fear in the market, further pushing away from a bullish scenario. Pay attention to the news flow because if any large event does occur, the market could change at any given moment.
One big level we want to focus on this week is the 200-day simple moving average (SMA) on the S&P 500 (ES). It’s a battle between the 200-day SMA and a reversion to the mean, showing the market is changing structure now that the ES is trading below the Ichimoku Cloud. Long story short, it’s going to take a lot of work for the bulls to take control.
If the ES doesn’t break below the 200-day SMA, we could just stay in choppy territory.
The ES will need to hit $4,600 to start slowly working its way back to bullish. Until we see things change structurally, we’re trading in a short-the-pop type of market.
Here is our focused list:
NVDA – On Monday, NVDA held $240 and popped to $251, reverting it to the daily mean. If it keeps holding $240, it could revert to the mean again and head to $260. Point of control (POC) at $243 could be a good spot to buy. If NVDA gives up its strength and breaks below $240, we could expect a move to $230.
SHOP — If SHOP holds and breaks above POC at $883, look for it to break through $915 and revert to the mean near $1,000. If SHOP rejects $883, it could drop to $800, $780, and potentially fill the gap to $745.
GOOGL – Announced the stock split last week and has been selling off for a healthy pullback. Be patient with GOOGL. If it can trade through its 50 daily SMA near $2,820, it could push to POC near $2,866. Below POC, look for a move to $2,700.
Stay Focused!