The market is heatin’ up to start the week! We’re seeing the exact scenario we’ve been preparing for with the market plummeting to the downside. We want to keep our focus on two major indicators: the 50 simple moving average (SMA) and the Daily Ichimoku Cloud.
In the last year we’ve noticed a common “if, then” rule with these two indicators…
If we don’t hold the 50 SMA, then we drop to the Daily Ichimoku Cloud.
On Monday, we saw exactly what we expected with the S&P 500 (ES) dropping below the 50 SMA and breaching the Daily Ichimoku Cloud. The market could see more trouble moving forward…
If the ES trades below the Daily Ichimoku Cloud for the first time this year, we might see its first bearish trend of 2021.
Rather than try and predict which way the market will go, our job as traders is to read and react based on the information we’re given in the market.
Here is our focused list:
GOOGL — Strongest technology name that started to trend down last week. Watching $2,767 as a key level. If it holds the $2,767 and 50 SMA zone, GOOGL has a strong chance for a reversion to the mean for a dip buy. Looking for a gap fill back to the upside.
ROKU — Relatively strong name holding itself up in the market. Setting up with a tight wedge to the downside. See if ROKU can hold its low from last week at $309 at the bottom of the 4-hour squeeze. If the market works its way higher, ROKU could see a push up for a strong potential long entry. Daily mean is at $340, so look for a push to around $330 to $340.
NVDA — Strong name that is vulnerable to drop, Key level at $208.75 around the 50 SMA, Would love to short NVDA down to the 50 SMA. If we hold the 50 SMA, we could see a gap fill. If we break the 50 SMA below $208.75, look for a drop to $200. If the market keeps dumping, we could even see NVDA drop to $180.
FB — Could be an awesome dip buy now that it is back at the Daily Ichimoku Cloud on its final leg of support around $352. If the market pops, FB could rally to the 50 SMA with a reversion to the mean. If it goes below, FB could head down to $330.
Stay Focused!