Bulls Need to Show Up
RLT Newsletter
Wednesday opened with a beautiful gap on QQQ. I messaged everyone first thing in the morning in the RLT Swing Trade channel and let them know that whether we saw strength or selling here would be really telling. It was the perfect gap for bulls to jump in and push the market higher. QQQ had 5 days of consolidation after a great run, and Wednesday’s gap was just over that 5 day range. Instead, buyers did not step in. We continue to see rips getting sold, which means bulls are still not ready to push this thing into new all time highs.
QQQ Daily Chart
A number of the Trillion Dollar Titans looked weak all day. Since the pop in tech was mostly contained to the semiconductor names, they weren’t gapping nicely in the morning. AAPL, GOOGL, MSFT, AMZN and META all sold off for most of the day. The pullback in those giants makes sense, especially since the market is still not sure what to make of the hyper spenders and they all have had great runs over the last month.
SOXX had a marvelous gap just like QQQ, and also saw selling for most of the day, but still managed to close above the last 18 days of price action. Memory stocks broke out of the tight pennant patterns I’ve been watching for the last month or so, but didn’t really go anywhere. MU printed a small doji candle just under the next major resistance level and just below the anchored VWAP from the highs. Until MU can close above that level, which sits at $949, it likely stays in this sideways consolidation.
MU Daily Chart
INTC gave a similar candle to MU, just below a strong resistance level. If it can push above that level, it has a nice bit of runway up to the overhead gap at $121. If it instead breaks down and starts closing below the 100 day SMA again, the probabilities point toward it heading lower and revisiting the major open gap below $80.
INTC Daily Chart
In this market I’m still looking for relative strength standouts. One I’ve mentioned a few times and am long is HPE. It behaved perfectly after gapping above a 2 month consolidation range, retested the range, and has been pushing higher ever since.
Another few momentum and relative strenght names I have my eye on are NET, SW, MRX and FIVN.
HPE Daily Chart
If TSM, NVDA and the semis can hold their gaps and turn up into the end of the week, things will be looking quite nice for the markets. That’s what I want to see in order to trust the bullish push again. TSM’s gap is a brilliant one, but if it falters and fades back below 418, that won’t be great for the bull case.
TSM Daily Chart
Until the market starts pushing higher on great gaps again and shows that bulls are actually ready to show up and play, I’ll stay more wary of taking breakouts. I’m lowering my entries a bit, being more conservative in my approach, and looking to buy weakness on strong names with high probability set ups. As of now, gaps are being sold, names like AMZN are selling off and closing at the lows, and I’m glad to be fully collared up in my QQQ and Gold positions, staying quicker and tighter with my swing trades.