Market Trends with Brian Shannon: Insights on S&P, NASDAQ, and Top Stocks

Today is December 18th, a Wednesday, and we’ve got some intriguing developments unfolding in the market. While we have the Federal Reserve’s actions looming over us, this isn’t about predicting their next move or its direct impact on markets. Instead, let’s dive into where we currently stand in the market landscape and explore strategies to identify lucrative opportunities.

Assessing the S&P 500
Let’s kick things off with the S&P 500. This powerhouse index is currently holding above that symbolic number of 600, sitting pretty over the orange anchor from the election and a rising 20-day moving average.

Key Observations:

• Timeframes: On the left, we analyze the daily timeframe, while on the right, a 30-minute timeframe provides a granular view. Every bar here represents 30 minutes of trading.
• Recent Patterns: Over the past week and a half, we’ve noticed lower highs alongside repeated tests of existing support. However, this doesn’t spark a bearish outlook. We’re still riding a robust long-term uptrend.

Even with some consolidation signs and potential catalysts that could alter supply and demand dynamics, we remain in a festive trading environment. The market is just days away from an all-time high.

Supply and Demand Dynamics
Here’s the good news: Today’s rally has nudged us a couple of points higher than the recent support band. In trading terms, the frequent testing of support increases the odds of a failure, yet not assures it—nothing in the market is ever a sure bet.

Aggressive Supply:

• Although we’re days away from all-time highs, the emerging pattern of lower highs suggests aggressive supply.
• Should the Federal Reserve’s actions displease the market, expect potential moves akin to a significant drop followed by consolidation. Such conditions might trap us under previous support.

Watchful Eyes Needed:
Similar to past movements in the biotech sector, breaking below support levels can lead to a more profound decline.

“Be aware of where your stops are and the level of risk you’re comfortable with.”

Yet, as long as we’re based on daily and weekly timeframes, trust the prevailing bull market until actual evidence suggests weakening trends.

NASDAQ’s Near All-Time High

Key Indicators:

• NASDAQ is merely two days shy of its all-time high. The light blue line represents the week-to-date volume-weighted average price (VWAP) from last Friday’s gap-up alongside the five-day moving average creating patterns of higher highs and lows.

What’s Next?

• Breaking below the current little low might induce short-lived weakness. Yet, the absence of bearish sentiment prevails unless trapped below the five-day moving average.
• Key level to watch: If NASDAQ breaks and remains below about 533 for more than half an hour, expect slight dips, though within a dominant uptrend.

The Russell 2000: Troubled Waters

Current Stance:

• Russell 2000 is under scrutiny, nestled in a zone that traditionally attracts buyers. Yet historical patterns since its high show consistent lower highs and lows, easing buy-the-dip calls.

Trade Smart:

• Instead of impulsively buying dips, seek strength after dips. In trading, patience and strategies are your allies.

Overlooked Details and Strategies

• Semiconductors: TSM holds promise; avoid AMD, which trends downward. Always lean towards buying semiconductor stocks in uptrends.

Drilling Down with Trend Alignment:

• Look for higher highs and lows above a flat or rising five-day moving average to identify potential sustainable rallies.
• Example Strategy:
  • Recognize elements needing analysis—potential supply impacts that develop resistance post-rally.

A Close Look at Key Stocks

• Tesla:
  • Continues breaking records. For new entries, it’s more a day trader’s turf. Focus on protecting profits rather than jumping in recklessly.

• Nvidia:
  • Seeing a rebound, though primarily for quick trends. Maintain a long-term bullish perspective while cautious about day-to-day volatility.

• Deere & Co.:
  • Post-breaking some resistance, poised for growth after decades of trade range-bound activity.

Daily Homework: Monitoring and Responding

• Set strategic entries as day trades that allow flexibility towards swing trades based on market behavior.
• Avoid pigeonholing price targets but recognize potential possibilities and strategize around them.

The Last Word on Strategy
When engaging with stocks like CEIH, or any displaying a downward spiral, the general rule is to leave them alone until clear signs suggest a reversal. The name of the game is consistently avoiding volatile gambles and sticking to tried-and-true strategies.

“Understanding the market’s structure across multiple timeframes helps leverage odds in your favor.”

Weekly Webinars:
To get more in-depth insights and strategies, join our webinars like today’s, focusing on education and subscriber questions. While seasonality might suggest optimistic times for indices like Russell 2000, treat it as a point of interest, not as an immediate action cue.

Wrapping Up
Engaging with the market involves continuous learning and adapting, especially as we navigate through weekly updates like the Federal Reserve’s actions. Having a strategic plan helmed by individual stock merits remains key to profitable trading.

Stay engaged, stay informed, and remember, analyze each trend individually while following your robust market plan.

Thank you for tuning in to this exploration of market trends! Be sure to keep abreast by subscribing to updates on StockTwits, YouTube, and following us on Twitter. Until next week, happy trading!