The indexes have started to slip, and suddenly the market feels like it’s getting a little tougher.
We’ve got the indexes slipping below key levels, and leaders losing technical support levels.
It’s clear money is moving around the market, but where?
On one hand, we have incredible explosive momentum in crypto that followed through today. Metals are looking superb.
But on the other hand, we have seen deterioration in software that has been a promising leader, and continued chop within the AI trade.
This market is commanding a lot of patience, and I’m not going to be too quick to dive into any fresh risk just yet. As setups and market feedback start to show, it’s time to be a little bit careful.
Tonight we break down today’s market stress test, look the elite RS names on focus, where the opportunities could be next, the ‘avoid’ signs I am seeing, and lots more!
Let’s go!
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QQQ is in bad shape as it is now rejecting the 21 EMA and finds itself slipping underneath the 50-day moving average.
This is not what we wanted to see, and there’s a chance that we could be heading towards an undercut of the follow-through day lows— if we don’t bounce now.
Let’s not front-run anything and get ahead of ourselves, but I’m a little bit concerned to see the way we have simply dropped below the short-term moving averages here.
With QQQ narrowly under the 50-day, that is an environment that demands extreme selectivity.
The character of the SPY has changed also, now looking a little more wide and loose and slicing well below the 10 EMA, on to the 21.
Whilst we are right at this EMA, I won’t get too negative on the market, but I do want to see some signs of supportive action soon.
Is the market heading for a retest of the breakout? I don’t know, but I’m going to stay as flexible as possible.
21 EMA support must hold, or we are in a little bit of trouble.
A very nasty session for IWM as it gaps down and slices through the 21 EMA, and now looks like it could be heading for the 50-day moving average.
It never ceases to amaze me how quickly risk can hit you in the market, as we continue to see indexes and leading stocks pull back sharply from their fresh highs.
I would like to see the 50-day moving average hold if it does get tested in the next couple of sessions.
We’ve also got some gap support from August 4 that could come into play here.
MAGS is looking a little bit vulnerable here, with an inside day sitting just under the moving averages.
This is where you have to have a bullish plan and a bearish plan and be ready to act based on whatever the market does.
We are struggling to reclaim the moving averages, so wait for that confirmation.
I’d much rather see the 10 EMA and the trendline taken before getting too excited about any price just yet.
Yes, technically SMH and some of the semiconductors showed some relative strength today, but in my opinion, there’s not that much to be excited about here just yet.
We are below the key moving averages, and today’s price action does very little to restore some of the damage that we saw in the last two days.
I’m going to be very defensive here until we see SMH reclaim the 10 and 21 EMA.
Forget about bias and how things looked a week ago; we must trade what is in front of us in real time.
Some subtle relative strength for ARKK as it actually manages to push up and test the pivot.
We didn’t see any sort of powerful breakout, but keep an eye on whether price can stay nice and tight right around this level.
This chart is actually starting to look pretty good, with really nice strength in the last week compared to most other parts of this market, so let’s see if we can get the breakout soon.
Although it wasn’t really an explosive day, it was great to see gold once again push for the 200-day moving average after shaking out and retesting it.
If this can turn into a massive resistance-to-support flip, then that would be extremely bullish.
We’ve seen the big run-up, and now I want to look for a little contraction right above the 200-day moving average and a new little pivot to form.
Some really nice price action for silver as it breaks through 63.92, confirming the upside move, but I’m not going to buy it or get too excited with the 200-day moving average looming right above.
For now, there’s no reason why we don’t see it follow in gold’s footsteps, but let’s not get smart and try to front-run a move or anticipate.
I’m only going to get bullish once we do break that 200-day.
This is one of the only things really exciting in the market right now, and we’ve actually got the volume backing it up.
After months of contraction and sleepy price action, the beast is now alive and well.
If you’re not positioned, it’s no time to chase here. You must exercise discipline and wait.
What I’m going to be looking for is a pullback into a rising 10 EMA, or two or three days of tight sideways action that sets up an aggressive continuation pivot.
I’m also very impressed to see Ethereum following through from yesterday’s powerful breakout candle, even though it already had a big session yesterday.
There is volume confirming this power, and price is telling us everything we need to know: crypto is back in play.
Just like with Bitcoin, we need to be patient and wait for a setup to develop.
Before placing a trade, always ask yourself if there is asymmetry and if the risk-to-reward makes sense.
Unsurprisingly, we have MMTW heading lower today, with the market having gapped down and weakness across most of the tech sector.
With the indexes looking pretty soft, I’m hoping that we are on our way to some sort of flush, but I want to see that happen in the AI trade as well, not just in the index.
Remains on a RISK OFF signal.
We are now starting to see a little bit of chop appear in the NASI, which is pretty common when we start to see that exact thing happen in the price action of the index.
Tech overall is not really exciting, so I’m being pretty patient now until I see improvements.
We have a few things going against us right now.
It was not too surprising to see MMTW pull back today as it continues to be stuck in the middle of the range.
Again, I want to see an explosion of breadth that will confirm improvement in this market, as opposed to just choppy conditions and our internal indicators ping-ponging around all over the place.
Flips to a:
YELLOW SIGNAL
Our market indicator has flipped to red, and that is not what we wanted to see.
Even though we were able to bounce, we are at risk of losing the 50-day moving average, and that’s going to be a problem.
Do we get an undercut and quick reclaim of these moving averages?
I will continue to proceed with my guard up, but ready and nimble in case we do turn back up quickly.
At the very least, we can look at this tool and say that this is not necessarily a big-dollar, easy environment.
Remains on a RISK OFF signal.
Our market trend indicator continues to be risk-off after losing the signal a couple of sessions ago.
Whether or not this is a short and quick shakeout before a resumption higher, or the end of the rally, is not something I’ll waste my time trying to figure out.
Trade the chart in front of you, as that is all you can control and focus on.
We want to get back above the moving averages quickly here.
As the market softens a list of my strongest actionable names
The sectors to focus on and the sectors to tread very carefully around
Our Market Indicators and what they’re showing - hint: trouble
The software names holding firm while the groups falls behind
Breaking down the reclaims and levels we want the bulls to hold
Internals/Breadth of the market reviewed, and a situational awareness update
Portfolio update, how we’re approaching chop / review the traps
Nightly round-up video putting all of our analysis together and reviewing charts.
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