Week of August 7th, 2023
July over, pullback has started, what's next?
Hi everyone! This one will be short & simple as I am away from home on with limited access to my tools and scanners. I will post an update during the week.
In our previous newsletter, I highlighted the significance of $SPX level 4582 and mentioned that if the bears managed to hold this level, we could see a decent pullback movement towards 4494-4500. Bears took control early in the week when SPX failed to take out last week’s highs and the Fitch downgrade came through causing momentum to reverse. I’ve mentioned a few times that the bull’s biggest enemy is not the bear, it’s the other bulls who see their unrealized gains start to dwindle and then step on each other’s toes on the way out.
Key Levels: 4582 will be the key level for the week.
Bearish Trajectory: If bears hold below 4582 it will drop to 4545-4550 key level. If that does not hold then a drop to 4494-4500 is expected.
The range for the week was 4594 to 4474 and we closed at the lows.
Our Discord community is the place to be for real-time updates as we noticed distribution taking place with multiple significant large dark pool sells happening on QQQ 0.00%↑ between 383-384. This was followed by massive out of the money put sweepers on SPY 0.00%↑ for 400P, 390P and others for SEP 8. This all happened BEFORE the Fitch downgrade announcement. This combination along with our key level allowed for us to follow along on some SPY 420P SEP 8 at an entry of 0.84 per contract, and these went well over 100%.
A reminder of VIX seasonality:
We have finally moved down from “extreme greed” into “greed.” The markets have effectively completed a “reset” however the flow suggests there may be more downside ahead as there was ANOTHER SPY 380P SEP 8 large sweep before the close on Friday.
I want to add that although this was a sharp pullback week - we pointed out the 140C flow on AMZN 0.00%↑, which although was slightly early, was spot on now looking at the ER reaction.
For this upcoming week I will be watching the following setups and levels:
SPX Analysis:
We got the pullback and completed the backtest. This is still normal bull routine so far. We will keep an eye on the key level and trade this level by level.
Key Levels: 4514 will be the key level for the week.
Bullish Trajectory: If bulls hold above 4514 we can retest the 8ema at 4526 and setup for a retest of 4545. If 4545 is taken out we will likely see a short squeeze up back to 4582, 4607 and 4650.
Bearish Trajectory: If bears hold below 4514 then pullback continues towards backtest zone at 4474 and gap fill at 4443. If below 4443 can target 4425 and 50sma at 4406.
SPY 0.00%↑
Key level for the week is 449.61-451.76
Bull case: Above 451.7 can see retest of 453-454 area. If that is taken out then 456, 459, and 464
Bear case: Below 449.61 can see retest of recent lows at 446.21 followed by 442.97 (gap fill). Next immediate support below that would be the 50sma at 439.65.
QQQ 0.00%↑
QQQ broke down out of it’s channel after massive dark pool sells at 383-384 zone.
Outlined bull & bear case paths for next week below.
Bull case involves retrace and re-entry of the channel and buildup of energy to conquer the 383-384 major resistance zone.
Bear case involves continued downside into 50sma below at 366.42
Note: MSFT appears to be leading, and HAS NOT re-entered it’s channel.
TSLA 0.00%↑
Key level: 258
Bull case: Above 258 target 269. Above 269 target 276.91 and then stage a gap fill move to 289.51
Bear case: Below 258 can target 254 and if that doesn’t hold, 240 before staging a gap fill move to 235.23
BA 0.00%↑
Weekly breakout as long as above 225 to targets 240 and 267.51.
/GCQ23 (GOLD)
Breakout on daily & weekly as long as above 1945 to targets 2004 and 2044.
Chart valid for GDX 0.00%↑ GLD 0.00%↑ NEM 0.00%↑
BABA 0.00%↑
Possible weekly breakout has started - pending confirmation next week. As long as it holds above $94 (firm LIS) breakout likely to succeed to target 105 then setup for gap fill at 116.81 and then 120. Void below $94. Can short below $94 to target 89.
JD 0.00%↑
Aside from running together with BABA which is on the verge of a large breakout shared in a prior idea, JD here is breaking out from this multi-month wedge with multiple gaps above. If above $42 there is room for a run towards gap fills 44.82 and 51.71 with the red line above being major resistance. My LIS is $37.
XLE 0.00%↑
Energy is breaking out and the 8ema is set to cross the 50sma soon which can lead to a large move. As long as above $79 this has run towards 87.32 and 90.57 next.
Broke channel to the downside. Buffett continues to buy billions in treasuries. I think that despite this move, it’s still a higher low vs October and the downside risk is minimal. I am holding my longs.
NVDA 0.00%↑
NVDA a nice one to watch for the next few weeks. It officially broke down out of it’s bullish channel and is trading in a bearish one.
Watching 50SMA come up into the channel, and then watching reaction of price after tapping the 50sma. If it loses the 50sma with conviction it can be time finally for the short into 385.
MSFT 0.00%↑
Continued pressure to the downside now that 8ema is under the 50sma and 50sma failed to hold.
Have a wonderful weekend!
Wishing you a successful and profitable trading week ahead!
Best regards, Jovan