Hi everyone!
A tremendous rally after NVDA 0.00%↑ earnings taking us to 5100 SPX and into new time highs yet again.
Last week I mentioned in our analysis of SPX:
“Bulls are in control above 4999. If above 4999 we continue up towards 5100.”
While we did start the week below 4999, I gave 2 levels for the entire week & mentioned that losing 4999 was the first warning, but the pullback would not start unless 4929 was lost:
You can see here how that made the dip buy an easy decision:
The prevailing trend has unmistakably been a lockout rally, causing those anticipating a dip to remain on the sidelines or be compelled to chase the market at its peak due to FOMO. You can see these breakaway gaps consistently where we gap and go and continue. In recent weeks, I've consistently emphasized the need for caution in long positions. I've highlighted the gradual conditioning of traders to buy every dip, emphasizing that a day would inevitably arrive when this strategy transforms into a potential trap. Take a look at where we are at on that rising wedge, we are very close to a substantial pullback.
I will keep mentioning this because the risks are currently elevated: Crucial for the upcoming weeks: "Buy the Dip" (BTD) strategy remains viable as long as crucial support levels hold. However, if support crumbles, it triggers the initiation of a short trade, and this short position should be maintained until a resistance level is successfully reclaimed. This underscores the importance of adaptability. For those accustomed to habitually buying every dip, swift pivoting is essential when support levels start to erode. Failing to do so might result in surrendering hard-earned gains by persistently attempting to buy dips amidst a multi-day, multi-support downturn.
There has been increasing amounts of insider selling activity across AMZN 0.00%↑ META 0.00%↑ MSFT 0.00%↑ AMD 0.00%↑ NOW 0.00%↑ JPM 0.00%↑ LLY 0.00%↑ and others which also suggests caution in the weeks and months ahead as we near the apex of this rising wedge:
The red lines drawn above is important zone to watch for the upcoming week. We are looking at a rising wedge that is reaching its apex. My “rug pull” senses are tingling so I suggest extra caution in the weeks ahead.
SPX Analysis:
Key Levels: 4929 & 5037
Bullish Trajectory: Bulls are in control above 5037. If above 5037 we continue up towards 5150-5180. Due to being at the top of this rising wedge, a retest of 5037-5048 is likely and I would prefer to re-long a failed breakdown of that area vs a chase long at 5100.
Bear Trajectory: A break of 5037 turns into a failed breakout which can lead to a gap fill at 4983 and a retest of recent lows around 4929. A breakdown of 4929 leads to a larger sell towards 4906, 4866, 4842. In the event of a flush below this level I will send an additional newsletter with new levels. Keep an eye on this large rising wedge structure to be aware if we are still consolidating inside it or if we are breaking down.
Summary:
BTD continues to be in play as long as above 5037. A fail of 5037 is the first warning to bulls that this rising wedge is about to break down and can see the start of a 250+ point flush.
IWM 0.00%↑
Inside bar this past week - breakout retest is holding this 200 key level has to break for an upside continuation here. If we can get over 200 we can retest 205 and if we take out 205 we get a move to 216-220. Longs ok as long as above 190.92.
QQQ 0.00%↑
QQQ remains in active breakout with 408 continuing to be the pivot spot of control. Above 408 there is plenty of upside room into 472 (measured move).
We can use the 420 level as a guide, if we fall below it, we could see a retest of 411. If 436 is taken out we can see a move into 449.84.
There is no bear case here unless 408.71 falls which would be a short to 394 and 387.
TRADE ALERTS:
For those of you not in the Discord (www.jr28trading.com) I highly encourage it as we cover a lot of the setups given here but we also alert LIVE trade ENTRIES and EXITS. FOR A LIMITED TIME, THERE IS A LIFETIME SUBSCRIPTION OFFER FOR $555.58, THIS PROMO WILL END TOMORROW NIGHT.
On the subscriber only newsletter:
We covered amazing setups and gave clear LONG or SHORT recommendations on each ticker.
We had some fantastic wins this week on QQQ 0.00%↑ AMD 0.00%↑ & others
Some example trades this week:
QQQ $431C FEB 26 from 1.7 to 8+
AMD $180C MAR 8 from 2.6 to 7+
Sentiment Check
Here is the economic calendar for next week:
A separate newsletter will be sent tomorrow with the setups I am watching for next week to paid subscribers.
Have a wonderful weekend!
Wishing you a successful and profitable trading week ahead!
Best regards,
Jovan