24/04 - Trade ideas, watchlist, portfolio & index review, market timing indicators
Market bounce stalls, hit AH as big tech earnings cause a selloff. Caution has been our main message.
I mentioned yesterday that the ‘easy’ part of this bounce was over and that the rubber was about to meet the road. Today we got our first test in the market.
The tough road likely continues as the market sells off after hours on the back of META’s earnings report.
We have been adopting an active but very cautious approach to the markets and that stance will become even more defensive if we see more weakness tomorrow.
Big tech is back under pressure. Let's go through the plan for tomorrow and the strengths and weaknesses I’m seeing in the market.
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Today’s newsletter
Index review
Market timing indicator
Watchlist/trade ideas
Portfolio review
1. Indexes update
QQQ - This index met resistance at its 10 day moving average and is now gaping down heavily after hours on the back of a poor response to tech earnings. We are still holding half of our short position, and we will see what the action looks like tomorrow. But perhaps a test of the lows is incoming.
IWM - This index has managed to hold its 10 day moving average, but faces a tough test with multiple moving averages above set to provide resistance. This index could easily breakdown lower from here or grind sideways before attempting a move higher. I will react to the market.
SPY - This index also held its 10 day moving average, but looks to be facing some selling pressure after hours also. It remains to be seen whether further weakness will lead to a test of the lows, or perhaps we can build a higher low. More information is needed.
Bitcoin
I was stopped out of my Bitcoin position earlier today on the break of range. For the moment, not interested in any moves here.
2. Trade ideas-Watchlist-System Signal
The market showed very limited follow-through today.
From a technical perspective, many charts were set up with bear flags and rallies into declining moving averages on low volume. I have remained extremely cautious. and stressed that we are far from out of the woods.
Tomorrow, the focus is going to be on how bad the selling will be in Tech following a bad reaction to META’s earnings.
I am seeing a couple of ideas in the commodity space, and I think that is where the best opportunities may lie.
Let's go ahead and explore what I see under the hood.
TRADE IDEAS - Note, that all entries are marked on the chart (green line) and stop losses are low of day OR the prior day’s low, unless written otherwise. Please feel free to use discretion and use whatever stop-risk level you are comfortable with. Most of the time, I use the low of day (0-1.5% stops typically).
VLO
Setup: Trendline breakout (reports tomorrow BO)
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