Good morning,
After a huge 3-Day rally, we have mixed markets around the world. Europe is up small, while Asian markets are mixed. The US futures point to a flattish to down open. Yesterday, we witnessed the 3rd consecutive positive day in US indices. Given the scale of the recent rally, it is important to acknowledge the fact that we may be due for a little pullback. The overall market measured by the $SPY reached an important resistance area at $441. The last time we got to this level, the bears re-took control and pushed prices lower. It will be important for the active bulls to defend as much as possible of the recent rally in order to maintain momentum. We have trimmed our longs into strength and are going in rather neutral into today’s action. We left trailers in $TSLA, $AMZN, $NVDA which continue to act very well.
Today we have an important market events as the OPEX and rebalance of indices takes place. On such days, volatility tends to increase as investors re-balance their portfolios ahead of the new period. From early estimates, $AAPL and $MSFT are on the sell-side while $TSLA and $AMZN are on the buy-side. One cannot base trades based solely on these calculations, but it is worth knowing before the trading day. The geo-political situation remains tense as we still have no signs of a peace treaty between Russia and Ukraine.
Broken-down stocks such as $PYPL, $SQ, $MTTR, $PLTR posted impressive candles yesterday. See if they can offer a red-to-green type of trade today and continue to push higher. Again, this would be the 4th day up, which is always a better trim than add.
Our focus today will be on the tech stocks, especially the semi-conductors $AMD and $NVDA to see if they continue to diverge or not. Yesterday, $AMD was much weaker and showed no momentum, while $NVDA managed to close above Wednesday’s high. See if the roles switch today, or if $NVDA will play some catch-up to the downside.
For the overall indices, watch 2 important support levels. The active bulls need to defend $435 in the $SPY, while for the $QQQ $340 is the line in the sand. In case we get another push higher, $350 is the big resistance for the tech sector, while the $SPY has some room to $446.
Caution is the main word of the day. If you participated in the recent rally, make sure to book your gains and wait for some market discovery. In case of a major pullback especially in $AAPL and $MSFT right before the close, we may be inclined to buy some shares for an overnight, for a possible bounce on Monday.
$TSLA will be a good barometer for today. Does it defend $866 and offer another trade above $890, or does it get rejected at this current downtrend line?
Bitcoin continues to re-build in the recent channel. From a technical perspective it is building a bull flag above 40K. See if it can take out 42K for a confirmation of this pattern.
We Grow Together!