PRE-OPEN MARKET COMMENTS MONDAY – Good morning! I am back from an incredible trip.
I would like to thank Hari and Kristen for inviting me into their home and for hosting an incredible dinner. It was great to finally meet Hari. We have a lot of plans for this year and we are going to kick some ass in 2023. From a trading standpoint, many of you are off to a great start and that was obvious when I looked through the chat logs. Thank you for helping each other in my absence.
My trip also included a personalized tour of SpaceX conducted by my son. I am speechless. Obviously, no photos allowed in the facility, but it was so cool watching them work on Dragon. The protective shielding was off and the circuitry is unreal. I’m concerned about the future generations in the US and there are many problems they will have to face. After seeing these young scientists at work and play, I am encouraged.
With regards to the market, we got a nice breakout after the Fed. As I mentioned, we do not just need the breakout, we need follow through. Earnings from AAPL, GOOG and AMZN needed to fuel the move higher and it did not. The “hot” jobs number did not help. There is “Fed speak” Tuesday and the market is bracing for hawkish remarks. From my perspective, the Fed did not mince words. They plan to keep hiking, but the market did not care.
We have to be careful here. We are retesting the breakout. If the breakout fails, we could easily test the lower trendline. Bullish specs who bought the breakout will be flushed out and that drop could gain momentum. Now that mega cap tech companies have reported, short sellers will be more aggressive.
Speed is the critical component. If we are able to tread water close to the breakout, it is a sign that buyers are still interested at this level and that the gains have to be digested. If we see a pullback similar to the one on December 13th, we could have some nice shorting opportunities as we blow through the major MAs. As those fail, we are likely to see bearish trend days.
Our ideal set-up would have been a breakout with follow through. We did not get that so now we have to be patient. Often the breakout will be tested a second time like the one on December 13th. When that fails it forms a double top lower high and sellers get much more aggressive.
Stay in day trading mode. We should continue to see nice intraday ranges and movement both ways. We will know which way this is going to break based on the price action this week.
There was a “Golden Cross” and the 50-day MA is above the 200-day MA. That is typically bullish and it does not happen until there has been a bottoming process.
Support is at $395 and resistance is at $418.30