The Market Overview

Today, we are witnessing a gap higher in the markets, and there’s much to discuss. Following a significant sell-off, we’ve experienced a persistent rally. This rally seems unstoppable as it breaks through every level of interest that could potentially become supply.

Let’s start with the S&P 500 futures and the NASDAQ. As depicted in the one-hour chart, both indices are gapping to new recovery highs. Our analysis wouldn’t be complete without noting the current one-minute timeframe and the new week-to-date volume-weighted average price (VWAP) in green, which highlights this upward gap.

Current Stats:

• S&P 500 (ES) is up 1.23%
• NASDAQ is up 1.6%

Weekend Recap

In my weekend video last Friday, I put a spotlight on the overall market trends. It is crucial to understand where the market is heading, the likely path it might take, and more importantly, the risks involved. I have taken a cautious approach, although not bearish.

“Being cautious is significantly different from being bearish.”

Although I have underperformed during this upward journey, it’s worth mentioning that I’m still near my all-time high across all accounts, including crypto.

Nasdaq Analysis

Let’s talk about Nasdaq—specifically the retracement levels and moving averages. On Friday, it was at the 61.8% retracement of the all-time high and the year’s low. We’re also seeing Nasdaq at the 200-day moving average.

Key Technical Indicators:

• 200-Day Moving Average: A critical black line
• Anchor Line: From the election period

Despite the gap anticipated on Monday, it’s crucial to stay disciplined and consistently evaluate the market. When we’re below the declining averages, I favor trading the bounce.

The Importance of Being Cautious

Caution does not equate to bearishness. I look at current market situations and give buyers the benefit of doubt. It’s about discipline—trading with a strategic approach rather than impulsively calling tops or bottoms. The market has blown through supposed areas of supply, which is unusual.

My charts reflect potential scenarios rather than predictions. If significant levels break and then fail, we might witness a deeper pullback. I would welcome this, allowing us to establish higher lows and potentially continue the journey to new all-time highs.

Stock Analysis: A Closer Look

Semiconductors

Each stock should be evaluated based on its merits. Semiconductor trading is done with specific focus on their individual trends.

Resistance Levels

Resistance levels are evaluated as potential areas rather than absolutes. They can only be confirmed post-action. Many attempted to sell short at moving averages but were met with subsequent rallies.

People often project their beliefs onto the market. Maintaining objectivity is vital, especially when assessing trends in industry-specific stocks like semiconductors.

Strategies for Navigating the Current Market

1. Cautious Stance: Raise stops on long positions, especially if facing extended phases with the possibility of reversal.
2. Evaluate Scenarios: Be prepared for various outcomes, like breaking resistance followed or failing to hold them.
3. Sector-Specific Insights: Treat stocks based on their unique trends. The semiconductor industry, with established uptrends, should be left until proven otherwise.

Stock-specific Insights and Analysis

Unity Software (U)

The stock’s weekly chart reflects neutrality. Despite being above some anchors, it remains trapped below year-to-date anchors with declining averages. A cautious approach is essential.

Catalyst Pharmaceuticals (CPRX)

This volatile biotech stock has found consistent buyer interest at its 200-day moving average. However, it’s not compelling enough for long-side trades due to its unpredictable nature.

Take-Two Interactive (TTWO)

Within a long-term uptrend, the setup suggests possible involvement post-tightening. Exercise patience before making any strategic moves.

Root Inc. (ROOT)

Despite volatility, its long-term trend aligns with a stage two uptrend. A suggested strategy includes seeing whether the stock settles before jumping in.

Biotech Sector (XBI)

The potential bearish news could already be reflected in recent actions. Observing price feedback post-news helps determine the direction.

Lithium American Corp (LAC)

LAC has had a strong percentage rally but faces challenges against prior resistance levels. It’s essential to guard against profit-taking.

Market Outlook and Strategies

1. Patient Monitoring: Continually observe these markets, allowing price actions to inform decisions rather than being swayed by initial headlines.
2. Strategic Entry & Exit: Understand the broader market context and avoid impulsive decisions—buying breakouts after significant rallies may not yield favorable risk management.
3. Trend Riding: If you’re riding current trends, adjust stops to protect gains.

Conclusion

Navigating the current market requires discipline, caution, and strategy. Evaluate each stock individually, consider broader trends, and prepare for multiple scenarios. As always, remain vigilant and informed, ensuring your investments align with strategic insights rather than mere predictions.