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Our View
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Like anything in life, it’s best to keep our eyes on the road and today’s “road” is the current rally in the stock market. At the current levels for the ES, the risk range is 27-to-1 down. In terms of the market’s rally, 90% of the rally is supported by 7 stocks (with AAPL and MSFT making up 40% of the rally).
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Obviously, “thin to win” has played its part and it very well could continue, but I think there is still a reason to be a little untrusting of this rally (even though it could have more room to run) and to be concerned going forward. You all know I am a bull at heart, but the realities of the world do not change because the S&P had a good quarter.
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All too many times over the last year, traders fall in love with the rally and end up with pie in their face. For example, a leaked email from McDonald’s says the firm is closing some corporate offices and laying off workers. It’s the latest in a long line of job-cutting. Last month, Craftsman Tool — which was started in 1929 — said it was shutting down its only US factory next year.
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Look, I hate writing this stuff — seriously, I really do! — but there is a cold reality out there and unlike past bear markets, I really don’t see an end to the carnage right now.
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Our Lean
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The declines are shallow and after the buy imbalances show up, the futures effortlessly go back up. Again, “thin to win” is partially in play here. However, I really believe this buying is tied to the quarter-end and the beginning of the new quarter.
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The volume is just not there (which should be a concern). That said, the bias is still to the upside and that trend is hard to fight.
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Our lean
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Sell the early rallies and buy the pullbacks — again — which worked well on Monday. Also, keep an eye on the 3:30 imbalance. Yesterday was only $411 million to buy, which could mean less late-day buying.
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MiM and Daily Recap
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The ES sold off down to 4122.75 on Globex and opened Monday’s regular session 4132.50. After the open, the ES traded 4131.75 then rallied up to 4157.75 at 10:30, sold off down to 4127.75 and then rallied back up to 4142.50 at 12:19. The ES sold back down to a higher low at 4133.50, rallied up to 4041.50, sold back down to 4133 at 1:55 and then rallied up to 4156 at 3:35 as the early imbalance showed $41 million to buy.
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The ES traded 4153 as the 3:50 imbalance showed $411 million to buy, traded down to ~4150, then up 4156.25. It traded 4152.75 on the 4:00 cash close and settled at 4153.50 on the 5:00 futures close, up 16 points or 0.4% on the day.
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In the end, the ES rallied, had another small pullback then rallied again. In terms of the ES’s overall tone, it was firm. In terms of the ES’s overall trade, volume was lower at 1.33 million contracts traded.
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Technical Edge —
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Remember, it’s a short week with markets closed on Friday. VIX is back near its range lows and the S&P is up 7 of the last 8.
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The trend is clearly bullish, but it’s also extended in my view. Short-term, that’s not bearish, it’s actually healthy.
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We are getting a great reaction out of WYNN and our list of individual stocks is growing quickly, but a pullback would be great to get some healthier setups.
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S&P 500 — ES
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Our 4158-60 upside level was hit almost to the tick (with the ES topping out at 4157.75). It powered up nicely through the Friday/March high of 4142.50, which remains key going forward this week.
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Key Pivot: ~4142.50
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Upside Levels: 4158-60, 4175, 4200
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Downside levels: 4142.50 (last week + last month’s high) 4118, 4100, 4060-65
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SPY
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Key Pivot: $411.37
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Upside Levels (SPY): $409.75 to $410.25 (last week + month’s high, 78.6% retrace), $414
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Downside Levels (SPY): $407.50-ish, $405, $399 to $401.50
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SPX
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Upside Levels (SPY): 4127, 4150
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Downside Levels (SPY): 4110-12, 4078-80, 4050, 4012-4030
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CRM
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CRM Daily
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It has traded great lately. Let’s see if we can get a reset back down to the ~$194 area (the post-EPS high + rising 10-day ema). That gives us a solid buy-the-dip opportunity.
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$196 to $197 would be our first trim area. On the downside, we want it to hold $190.
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Keep in mind, on the larger timeframe it’s hitting the 200-week sma.
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LMT
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LMT Hourly
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Hour chart above. For aggressive traders, let’s see if it can find some intraday support on the 10-ema, after Monday’s aggressive rally into the March high. 30-min chart could work too, but I would prefer the hourly.
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*Active traders only. You will likely have to manage this trade on your own as updates on intraday setups are hard to do in a timely fashion!
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TSCO
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TSCO hourly
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Another hourly setup on TSCO. It cleared the $240 area but looking for this one on a pullback. 10-ema on the hourly could act as support. Keep an eye on the 30-min chart too, to see if that buoys it.
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*Active traders only. You will likely have to manage this trade on your own as updates on intraday setups are hard to do in a timely fashion!
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Open Positions
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Bold are the trades with recent updates.
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Italics show means the trade is closed.
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Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
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** = previous trade setup we are stalking.
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FSLR, NVDA, QQQ, AAPL, down to runners. Congrats, all. Great sequence!
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AAPL — for those that were swinging AAPL for the longer timeframe, we got our $165 area to trim into and as we continue to tip-toe higher, I’d say down to ½ size here or even less.
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Raise stops up to $160.
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GOOGL for those still in — Trimmed ⅓ on opening push at 102.50. $104-$105 trim spot, down to runners vs. B/E stop or better.
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WYNN —Weekly-up over $110.73 — Should have trimmed ½ to ⅔ between $116 and $117.
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Sniffing for ¼ trim around the $119 to $120 area, but the bigger level is $125+ for those willing to risk the position against a B/E stop and have a little more patience.
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Go-To Watchlist
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Feel free to build your own trades off these relative strength leaders
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Relative strength leaders → Tech remains absolutely the strongest group lately.
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NVDA, AMD
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TSCO
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LMT, RTX
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MSFT, AAPL, META
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PANW, FTNT
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FSLR
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GE → love this name if we can get a test of the 10-week ema
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DKS, ULTA
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AQUA
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GOOGL, AVGO
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ULTA & LULU
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MELI
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Economic Calendar
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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
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Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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