Week of March 11th, 2024
New all-time highs (again), continuation in the wedge
Hi everyone!
We are nearing the apex of the rising wedge for $SPX and we should expect to see increasing volatility in the coming weeks. We put in a bearish engulfing reversal candle on Friday after hitting a fresh ATH and closing the week red. This bearish engulfing candle will need a confirmation next week - but if we break that 5100 level we likely finally get a breakdown of the wedge and a good sell.
Last week I mentioned in our analysis of SPX:
“Bulls are in control above 5094. If above 5094 we continue up towards 5150-5180. I would prefer to re-long a failed breakdown of 5094-5111 area vs a chase long at 5140.”
We started the week at 5149 and as mentioned a dip / failed breakdown below would be a more ideal long entry. We got that entry near 5060 and from there it was only up straight into our 5180 target which was fully met.
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. Bulls are in control above them, bears take control if price starts to trade below them. By take control - I mean the trend goes from buy the dips (bull) to short the rips (bear).
SPX Analysis:
Key Levels: 5056 & 5110
Bullish Trajectory: Bulls are in control above 5110 and can stage a failed breakdown (reversal of the bearish engulfing) while above this level. If 5150 is reclaimed, we can retest the recent highs around 5180-5200.
Bear Trajectory: A break of 5110 turns into a failed breakout which can lead to a retest of 5056. If 5056 falls, then we start a sell leg to fill the gap at 4983 and head into 4800’s.
Summary:
BTD continues to be in play as long as above 5110. A fail of 5110 is the first warning to bulls that this rising wedge is about to break down.
IWM 0.00%↑
We got our 209 test on IWM and then put in a doji on the weekly. This 200 level will continue to be key for us in the coming weeks. As long as 200 is supported on dips we should continue up into 216.83. If 200 falls - this turns into a failed breakout and 2b top and I would not want to be long below 200 here.
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).
427 level will be our guide. Above it we likely continue into 449.84 and above that is the full move into 472.21. No selling until 427 falls.
TLT 0.00%↑
TLT continued to show strength the past two weeks despite softness on the indexes. Bull flag here looking for 105 as long as 94 holds.
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.
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%↑ IWM 0.00%↑ TSLA 0.00%↑ AMD 0.00%↑ & others
Some example trades this week:
AMD $180C MAR 8 from 2.6 to 30+
AMD $190C MAR 15 from 3.15 to 25+
QQQ $440C MAR 8 from 1.75 to 3.50+
SPY $505P MAR 15 from 1.92 to 3.50+
SPY $512P MAR 8 from 2.40 to 3.90+
IWM $220C MAR 28 2024 from .60 to 1.20+
AAPL $175C MAR 15 from .85 to 1.7+
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