The Ever-Turbulent Market

The stock market never fails to offer a rollercoaster of emotions, mainly fueled by a constant stream of news headlines. For instance, today, we experienced a notable gap down to the anchor from the year-to-date low in the S&P 500. This movement was brief as it was quickly bought up, highlighting the reactive nature of market participants to current events—such as the Consumer Price Index (CPI) and its implications.

The S&P 500: A Closer Look

Let’s focus on the S&P 500. Initially, we saw a dive, but it rebounded promptly, reaching near the very highs of the day. Despite this bounce, it presents a cautionary tale—keep an eye on that five-day moving average (that sneaky orange line!), because it’s currently declining and poses a resistance level. This tricky dance of movements requires a careful balancing act from traders.

Potential Scenarios

The S&P 500’s bounce off a crucial level on the daily timeframe hints at the possibility of a bullish scenario. However, navigating these waters demands patience—it might need a period of consolidation, or potentially form a higher low. Nonetheless, this environment remains challenging throughout.

NASDAQ’s Promising Path

Shifting gears to the NASDAQ, it appears more bullish compared to the S&P 500. Its daily timeframe shows the red 20-day moving average positioned above the 50-day moving average, presenting a potentially promising configuration for more upward momentum. Still, the market’s recent breakouts in extended conditions suggest caution before jumping in headfirst. Observing a pullback and subsequent recovery would be a safer strategy before increasing your stake.

Anchored VWAP: A Quick Refresher

The Russell 2000, on the other hand, continues to puzzle traders with its persistent pinch—a phenomenon referred to as an anchored VWAP pinch. This situation arises when supply and demand wrestle for dominance at anchors from major reference points like elections or the beginning of the year. Although it initially appears to compress energy, this particular pinch currently lacks clarity, making it unwise to tangle with it just yet.

Sectors to Watch: Energy, Biotechs, and More

Energy stocks are experiencing a minor pullback into a defined range. It will be intriguing to see if these stocks can maintain their supportive five-day moving average and emerge as market leaders. In contrast, biotechs have sadly floundered, breaking down and reminding traders of the necessity to move on when things sour.

The Case of Tesla

Tesla keeps finding itself in conversations, especially considering the continuous poking around the anchor from past election events. Recently, it touched the anchor from the late-August low—the point where prior bottoms occurred. While some were anticipating a deeper slide, a modest bounce unfolded instead. If you’re looking to day trade, stay vigilant for potential supply at the week-to-date Volume Weighted Average Price (VWAP).

Risk Management Strategies

Managing risk is crucial near these key levels. You may consider utilizing tighter stop techniques for part of your position, while still holding onto the potential for upside momentum. For instance, a two-minute low violation could serve as a cue to trim some exposure.

“Being in the stock from a position of strength is key.”

By managing your risk and taking partial profits when necessary, you maintain a favorable stance that supports both emotional and financial well-being.

Nvidia: Awaiting Opportunities

Nvidia recently encountered supply aligned with both the anchor from the election and the declining 50-day moving average. Observations suggested a prompt stop-out, highlighting the importance of agility in volatile markets. With time, Nvidia might find stability and prepare for another potential run.

Stock Spotlights: Mid Caps and Trading Tactics

Let’s shine the light on stocks like MIDD, which recently broke through multi-year resistance levels with significant volume. However, it faces some shorter-term pullbacks. To navigate these moves efficiently, focus on higher lows and higher highs—a definitive uptrend signal.

Consider analyzing stock movements across multiple timeframes. Should a lower timeframe reveal a higher high and higher low cycle, it might mark an entry point within a broader uptrend, offering an enticing trade setup.

Remember the Fundamentals

While technical indicators paint a picture, always remember upcoming earnings and major news events, as these can disrupt any technical scenario.

Stocks Poised for Breakouts

Among the stocks to watch for potential breakouts, CFLT exhibits encouraging patterns after breaking longer-term resistances. Similarly, Upstart (UPST) illustrates a compelling narrative of recovery after a significant decline. Both stocks hint at the possibility for sustained upward journeys, reminiscent of previous high-growth phases seen in names like Palantir.

Let’s Talk Stocks

Robinhood (HOOD): This stock has staged a robust recovery and seems to reflect a similar pattern to what we expect from stocks like CFLT in the next several months. Though extended, its current uptrend remains robust.

Reddit (RDDT): Exercising patience can payoff. A pullback offering a higher low could be the moment to engage!

Grab Holdings (GRAB): Showing a nice tight consolidation, this one is worth keeping an eye on for a potential breakout.

Risky Business

Be cautious with names like Intel (INTC) and avoid getting swayed by temporary rallies as they might still be stuck in broader downtrends and resistive phases. Such stocks demand better discernment between fleeting recoveries and structural shifts.

Other Notable Mentions

• BBAI: A volatile play, but possibly worth considering if you’re into short-term opportunities.
• AI & Shopify (SHOP): Present varied narratives but require careful timing and strategy due to different underlying market conditions.

Wrapping It Up

This week, as always, the lesson remains: manage risk wisely, stay informed, and most importantly, remain adaptable. Whether it’s AI stocks, CPI-induced volatility, or mastering key aspects of trading psychology, there’s always more to learn in this dynamic and fascinating world of trading.