Overall market update/thoughts into next week:
This has been a pretty brutal week as the 10-year yield $TNX once again spiked after a pretty strong selloff the prior week which helped the markets gain some footing for the short-term upside bounce. For now, the 10-year yield $TNX is showing signs once again of a possible pullback next week as both the Williams % Range and RSI show negative divergence (chart posted below). If we can get a move down towards the gap below at 4.725, the markets may be able to get a short-term bounce into the week ahead.
The main issue with this is that China continues to dump US government bonds heavily which puts downside pressure on price and upside pressure on the yield. If this continues, the technicals would be thrown out of the window. With this type of whipsaw action I prefer to mainly focus on the most liquid names in the market for you to take and figure out what direction makes most sense for you to take a trade on. As the market stabilizes hopefully in the coming weeks, it will be easier to have more confidence in overall market direction.
The war in the Middle East makes this harder as well especially over the weekends where two days of the markets being closed is an eternity for what could happen over there as things continue to change extremely quickly day to day.
In general, the weekly candle charts I posted today definitely have more of a bearish leaning bias but remember most of these names sold off hard through important technical levels and an upside retest of these breakdowns is always the default assumption. I hope everyone has a great weekend and I sincerely appreciate you all being subscribers/customers and hope you are finding value in the subscription.
– Sincerely, Jonathan
$TSLA New trade idea.
A very strong move down today right to the January ’23 reversal VWAP zone shown on the weekly chart. At this point, a strong daily hammer candle is forming and is likely a signal for a short-term upside reversal as the Williams % Range is signaling oversold on both the daily and weekly candles with the RSI printing positive divergence. The upside target here is the bottom of the gap at $230.60 with invalidation being a daily close below today’s open at $210. This is a very good risk to reward with risk currently of around $4.40 with upside being $15-$16.
$XLI New trade idea.
Price gapped down this morning right into the confluence zone of the diagonal support and gap that fills at $98.31. The Williams % Range is signaling a potential short-term reversal here with the upside target being the previous pivot from $100.70-$101. The invalidation here is a daily close below today’s open at $98.55.
$GOOG New trade idea.
After an intra-day move down below the VWAP zone today which was the original downside target last week, price is stabilizing here with a potential bigger upside move if the market can get another 1-2 day continuation up. The upside target is the previous highs from $141.70-$142.40 with invalidation being a daily close below the bottom of the VWAP zone currently at $136.71.