Good morning and welcome to another chop fest on Wall Street. After yesterday’s rally which did nothing to improve the technicals for most charts, we are down big in pre-market. We managed to take advantage of the rally and made a few quick trades and exited all our positions by the end of the day. With futures down today, see if we can get a capitulation move in the indices from which we can build a new active sequence. High treasury yields, a strong dollar and a looming debt ceiling crisis continue to affect the mood on Wall Street.
The best possible scenario for today would be a considerable drop in the indices, for the bears to complete their move. Instead of a slow bleed to the downside, such a move would actually benefit most participants. Take the band aid out and let’s move forward! We are still below key resistance levels in most indices and individual stocks but we have defended the 200EMA so far. A break towards this line in the sand might offer some great discounts for our favorite tech stock. Bargain hunting might start today if the market will continue this pre-market trend. Compelling levels to buy would be $AAPL around $134, $MSFT around $265, $FB below $320, $TSLA around 760, $AMD below $97.
The tech sector is under increased selling pressure due to the high Treasury yields, a strong US dollar and tough comparisons to last year’s impressive growth story. A post-Covid economy, with higher inflation and taxes is definitely detrimental to this sector. We are in man’s land here, just below the 100EMA but still above 340 which is a more compelling buy area. A break below $350 opens the door for such a capitulation move to take place.
The weakest tech stock out there might offer a nice short opportunity if it breaks 3175. It has developed a head and shoulders pattern which if it materializes could take the stock down towards 2800. Watch how it reacts around this level if we get there today. It is completely broken here, below all key moving averages, and one of the few well below its 200EMA as well.
$TSLA continues to act well but is hanging by a thread above its 8EMA. Despite strong deliveries it got rejected when it tried to push above $800. A break below its 8EMA around 775, might open the door for $760 by the end of the day. Watch this stock as a barometer for the market’s complexion today.
For today, be patient, do not try to catch falling knives and wait for price discovery and more compelling levels before submitting capital to such a market. Do not have FOMO, watch the ADP numbers and see which sectors get a bid and which are the weakest. There are several short opportunities out there, so keep an open mind. Better days are coming. We Grow Together!