Hi everyone!
Yet another green week into new all-time highs. We are now green for 16 of the past 18 weeks and a 25% move on SPX.
Last week I mentioned in our analysis of SPX:
“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.”
We started the week at 5093 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 5150 target which we missed by 10 pts.
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: 5094
Bullish Trajectory: 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.
Bear Trajectory: A break of 5094 turns into a failed breakout which can lead to a retest of 5037. If 5037 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 5094. A fail of 5094 is the first warning to bulls that this rising wedge is about to break down.
IWM 0.00%↑
IWM took out the December highs this week. 199.88 will be the important level for next couple of weeks, as long as we are holding above it, IWM likely retests 209 and 216.83.
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.
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%↑ MARA 0.00%↑ & others
Some example trades this week:
AMD $180C MAR 8 from 2.6 to 22+
AMD $190C MAR 15 from 3.15 to 15.6+
IWM $210C MAR 8 from .69 to 1.20+
TSLA $205C MAR 8 from 2.56 to 4.40+
MARA $27C MAR 1 from 1.7 to 5.5+
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