Hello everyone , another great trading day filled with some great opportunities. Today i'll go over todays plays , and a question many have been asking , "Is the market going to crash ?"
As discussed in yesterday's post , SPY started to make its move back towards the highs upon holding 379, but failed to break any higher, seeing sellers stepping in just under the /ES all time highs off 3820. Failing to break higher just added some more conviction to the short thesis , and with today's selloff SPY was able to close back under 379 ( the key level we discussed yesterday). Todays close was good start for the bears , now comes the next step, getting under 3770 or relatively 377 on SPY, and that can start the domino effect. QQQ still leds to the downside failing to get towards the last breakdown zone off 317 and closing relatively poor. SMH and IWM made new highs , looking relatively stronger. Meanwhile the DOW began by jumping to a new high at open (DIA) but also failed to hold. Divergences are starting to appear in the market and it's something to keep track of, the big three; S&P , NASDAQ and DOW started to pivot back down with tech leading. VIX caught buyers today without making a new low, and this 3rd try off 21.5 could be the nail in the coffin and send bulls in panic mode. I'm not saying this is the end of the world or anything like that , but keeping all facts in mind, if you want to be a buyer, just make sure you have the right zones and use it for bounce plays, not expecting new highs anytime soon, (I find it much more effective just following the trend :) ) So continue to be safe and manage all longs wisely and not being a stubborn individual. All i'm going to say is we are looking for a down move the next few days. (will discuss rest in "Market Crash Looming"
The market opened on a slight gap up, and we had plays ready for good longs, and phenomenal shorts like always. As i like to say, "you gotta always be flexible and be prepared for anything to happen". Some tops watches for today were $NFLX, $FB, $ABNB, $DIS and a quick /ES walkthrough discussing the idea of taking shorts.
On the short side we had $FB and $NFLX, both listed before market open with the "over under" level indicating the key level to hold over or under for a short or long.
$FB - We opened under the key 255 level, a very important level from 9/25/20 , where we held on. gap p and based (as posted below)
(DAILY $FB CHART as of 1/14)
As seen in the image above , we got our first daily close under the 255 level on 1/12 and since we broke under, and held under the next day , that same level could be a key level to play continued downside. (Broken demand / support can turn into resistance/ supply when level is broke and held under - can be seen on shorter time frames. Facebook looks pretty weak and should continue down holding under 247 😄.
$NFLX- Similar to facebook , Netflix had a solid breakdown under 514 key support on 1/6 , based sideways for a few days , and broke down into support at 492. On 1/13 that 492 held support and continued back up today making a retest of that 514 breakdown today, giving a $14 short trade opportunity, with some more room to go 👀 ! Another great opportunity for shorts ;)
(NFLX DAIL CHART as of 1/14)
Now on the long side the best two picks where $PTON and $ABNB
$PTON- Had a nice 30min, hourly base on 1/13 over 164 and off today's open we had a quick flush to that support , almost as soon as we hit 164, PTON made a quick pivot shooting back up to all time highs , giving a $7 + ripper.
$ABNB- This was a continued swing trade from 1/13 as we closed positive , and it gave potential for entry on open and hold above 175 and 178. We opened right off the 175 level hitting 178 within the same minute, and then we based and made new all time highs, giving another beautiful $10 + ripper.
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WILL THE MARKET CRASH ???
As mentioned in the indices section , the market is starting to give true signs of weakness with many diverges occuring. By looking at the bipictureue the trend is still up, and in the case of the market it's no different.... yet. But when looking at markets as. whole we can use multiple factors to help spot weakness and signs of a reversal, and those signs are starting to flash. As mentioned above, spy failed to continue higher, along with tech and the dow , and as i'm writing this blog, /ES is down another 10ish points looking for that 3770 break . To put it into perspective , this drop can be massive one , setting us as low as 3510's (an almost 300 point drop) , maybe even lower if it happens over the course of a few weeks. The markets are starting to show weakness, and although buyers still continue to step in , failing to make new highs of this most recent consolidation isn't a good sign for the bulls, yes they can try to save 3770 again and continue that range from 3820-3770 , but once we break and hold under, it can get ugly quickly. Again this doesn't all have to happen in one night , or it might not even happen at all, as there are buyers off 3770 , 3660, 3620, 3550 . But it's definitely in the books , and the more time it takes for buyers without making a new high, the higher the a chance the bears will have to open the flood gates.
This has been the first time I have leaned back towards the bear side on this whole up move , as the signs are just too hard to ignore,it's definitely possible that I get proven wrong , but as traders, we trade or setups with the highest probability and the best risk reward and in this case , the short side trade is just to great an opportunity to pass up .
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Have a wonderful day and week everyone !