We had a digestion day yesterday, with some push upwards towards the end of the tape, showing strength and keeping our appetites for investment open. The $SPY fought the morning downtrend, and the $QQQ finally managed to reverse the exponential moving average lines, so we may be in for a green end of the week. However we had three days up, so don’t get overly involved, wait for market discovery when the tape opens and look for strong names. As I said yesterday $AAPL was a good choice and it was a rockstar, making another high. $MSFT was a bit wobbly but in the end the strength in this stock prevailed, and we managed to buy the dip. $PYPL had a day 2 but it is now approaching resistance at the 21 day EMA, so it may go side-ways before making its way up, if it has power left. We are still waiting for news tomorrow, with the CPI numbers, so I would not go all-in before the end of this week. The $SPY is quite extended now, even if it did not make a new high, however the $QQQ still has room to go. Yesterday we had fun with $DWAC as news hit the tape, and we bought it for a nice scalp. This is a momentum kind of stock and we exited at around $63, from $50 for a nice day trade. I am more cautious with momo stocks as they lose steam as fast as they gain it, so there is no need to give back your scalps by trying to squeeze more out of them. Remember: Don’t let your highs get too high and your lows too low. Balance is key in life.
Everyone is selling stock in this weakness, but I was a buyer yesterday when it went over $1050, and I added to my $1100 calls when it went over $1070. Musk sold a large chunk of his stock and it still did not manage to stay under the moving averages for too long. The level at which it closed yesterday is a big resistance area, so care is advised, but you can try this move out by buying some call options. It is up for 3 days, so I would be careful buying stock in quantity. If it goes above and stays above $1073 I am a buyer as it has space to go to $1098-$1113. If it does not, I will be out of the way.
Rivian came into my focus yesterday as it went above the 8 day $117.04, and I trimmed along the way to $123. I left a trailer for today, and I am looking to buy the dip if it stays above $120, as it can easily go to $126. I am not a big believer in this EV company, but I am a technical analysis trader and this stock looks like it is ready for an active sequence. When the EV sector is doing well you can find other contestants then $TSLA to get involved, and this is one of them.
I hope you trimmed $MSFT into strength yesterday so that you could buy the dip, as it was a smart move, looking also at the action in the $QQQ. I trimmed last night and now I am holding a small position as there may be a period of digestion for this stock until it goes back to its highs. The important thing is to hold $331 in order to show strength and to give me confidence to be a swing trader in this stock. $339 will be a big resistance area so I would trim close to this number, in order to get more comfortable staying in this stock for a longer period of time.
$SPY and $QQQ are doing well, the Omicron news has been digested and the market came back up strong. Now we are waiting for Friday’s CPI numbers and any other Covid related news if the scientists get answers from their research into this new variant. I am cautiously optimistic and I am looking to hold onto the cash flow produced by this 3 day rally, therefore I am quite light today and I am looking to wait for market discovery. As I am writing this the futures are flattish-red, so a red to green kind of day would be a good way to go. Pay attention to the ETFs as they are crucial for market sentiment, and always look at the $IWM as this will be the first gauge for investor appetite. The $VIX is at the lowest it has been for the past 2 weeks, so all the green signs are there, but anything can happen so keep your mind elastic and open to all possibilities.
For more in-depth analysis read Alex’s Morning Game Plan, where he describes our whole portfolio and tactics, and for any question you can write directly to me: [email protected]
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