Make Love not War!

Good morning fellow traders and Happy Valentine’s Day!

Not much love for the markets this morning as futures point to a new down open after Friday’s sell-off. In Europe the DAX is down more than 3% on growing concerns of a Russian invasion of Ukraine. Last week, the US indices closed on the lows as the CPI numbers came in hotter-than expected and the prospect of war spooked investors. Earnings continued to be generally good, but most reports have been for sale so far. The path of least resistance continues to be to the downside until the market prices in the FED’s new tightening policy.

The recent bounce off the January lows came to an abrupt end on Friday as both the $SPY and $QQQ closed below all key moving averages. On such occasions, the best solution is to get out of the way. Waiting for the correct set-up keeps your portfolio intact. Stocks which reported impressive earnings results such as $AAPL, $GOOGL, and $AMD led the Nasdaq lower on Friday, as they are reaching once again interesting buy levels. On the one hand, the easier route is to the downside, but for investors with a larger time horizon, starting to slowly accumulate strong stocks during this period might prove to be a winning strategy once the dust settles.

For this week the main concern will be a possible invasion of Ukraine coupled with a stronger than expected PPI on Tuesday morning. If neither of these events occurs, one can expect a decent bounce off the current lows. We remain tactical and neutral going into today, but will look for opportunities to go long should we get a strong signal. On our radar will be $AAPL and $AMD. Watch $FB and $NFLX to see if they retest the monthly lows, or whether $MSFT can bounce off the morning lows back into the 290s. These will be important clues for the overall strength/weakness of the market.

$SPY chart

The overall market took a nosedive on Friday afternoon on news of an imminent attack by Russia. We closed just above the 200EMA but are currently looking to open below it. Despite the fact that the Ukrainian situation remains a focus, no shots were fired yet. Closely watch Friday’s low to see if it gets reclaimed for a possible reversal going into tomorrow. $436 is the next support level before the monthly low of $420. In case of a reversal, the next big resistance level is $444.

$QQQ chart

The tech sector followed the overall market and drifted lower on Friday. For today, see if $345 gets reclaimed to relieve some selling pressure. If not, $338 is the next support level. Watch the big tech stocks to see if any buyers come chasing them. Semiconductors will be a focus this week as $NVDA reports earnings on Wednesday. $AAPL and $TSLA will be a good tell of overall sentiment in the tech arena.

At Eclubtrading we prefer to see the glass half full. As a special thank you and gift on Valentine’s we are offering a 50% discount to all our plans by using the coupon: LOVETRADING. Take advantage of this offer throughout this week.


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