Bears Finally Have A Day
RLT Newsletter
Monday gave us some bearish follow-through to Friday’s gap-and-go. Semis, which have been the clear market leaders throughout this entire rally, led the drop while software actually held up pretty well and put in a bullish day. That is exactly what I have been positioning for, so no complaints there. I got stopped out of my SOXX swing trade but day traded SPY, SOXX, and MU bearish for some nice wins. I kept all of them quick, because the resilience of the bulls in this market is still very real and the power hour into the close Monday afternoon was a good reminder of that.
Monday’s low created a pretty important level to watch on both SPY and QQQ. It lines up fairly closely with last Tuesday’s low. If we start taking out those lows, the May 6th gap fill becomes a high-probability downside target. But as long as we continue to hold last Tuesday’s low, there is still no confirmed lower low on the market. That means as long as $731 holds on SPY, there is still a legitimate chance we push into new all-time highs this week before any larger drop plays out, assuming one actually does.
If selling pressure picks back up and that key level breaks, then $724, $712, and $700 are the major support areas I will be watching on SPY. Those are the levels where I will look to add long exposure, depending on how the Trillion Dollar Titans, DXY, TLT, and oil are behaving at that point.
SPY Daily Chart
Trillion Dollar Titans Update
There are some interesting setups developing in some of the biggest companies in the world right now.
MSFT continues to act well and show real relative strength since I featured it here and went long. The 100-week SMA remains the main target and I really like how it has held above the 100-day SMA so far. If it closes below the 100-day SMA and loses Friday’s candle low, that would be the first major warning sign that it may not be ready to make a bullish move and could instead be setting up for another retest of the 200-week SMA.
MSFT Daily Chart
Tesla: Into a Support Zone
TSLA is sitting at a very interesting level for potential long exposure right now. I sent this chart out to everyone in the RLT Swing Trade Community when TSLA was sitting right on the 100-day SMA, 200-day SMA, and the anchored VWAP from the December highs. TSLA has given us three bearish days in a row and roughly a 10% correction.
It still has an unfilled gap overhead at $473, which would be my main midterm target on the trade. TSLA is such a volatile name that you really have to give it room to breathe. A perfect bounce directly off the 100-day, 200-day, and AVWAP would obviously be ideal, but I am not sure it makes things that easy on us. Hopefully it does, especially since I know a lot of people went long Monday afternoon.
As long as TSLA holds the $389 level I will continue to consider the bull thesis alive and let it work through some chop if needed. Below that level, the probability of at least a 100-week SMA retest starts increasing pretty dramatically.
TSLA Daily Chart
CLSK: A Setup Worth Watching
CLSK is another chart that looks pretty interesting right here. It had earnings last Tuesday and has spent the last week consolidating inside that earnings candle while sitting right on top of its major moving averages. The chart also has a massive inverted head-and-shoulders pattern with a double bottom acting as the head, which is about as constructive as a base can look.
It is currently above the 100-day SMA and 200-day SMA, even though those averages are still inverted since the stock has not fully transitioned back into an uptrend yet. It is also holding above the 100-week SMA, 200-week SMA, and even the 100-month SMA. That is a pretty good sign. Even though the chart has been moving sideways, it is still holding above every major moving average I track.
Monday’s bearish hammer candle created a solid trigger level to work with. Ideally I want to see CLSK push above that candle high to confirm it wants to play ball to the upside.
That said, this is still a very choppy and trappy name. CLSK has a history of wicking above prior consolidation ranges before reversing hard, just look at the fake-outs it gave in December and late January before those sell-offs. Even so, if risk is managed below the 200-day SMA, I think this one has the potential to develop into a pretty solid trade, especially if the AI trade continues ripping higher.
The longer CLSK keeps moving sideways inside last Tuesday’s earnings candle, the better the setup becomes.
CLSK Daily Chart
