Daily Plan 1.26.24
Another day where we were able to share excellent levels with folks, the levels turned out to the high and low of the day and had more than one opportunities to interact with the levels through the day.
One hit after another with GOOG, AMZN , UBER targets meeting at 155 and 160 respectively. Great action in MARA as well from that 15 level, rising to above 17 briefly. GCT another great winner along with Oil and refiners. CCJ as expected selling down from that 50 into near 45 today. PSTG clears 41. All of these and more shared in last few days or so.
Levels were shared in the newsletter as well as in our daily chat below. Join us in the chat and trade with us!
Before we dive into the levels for tomorrow, I do want to share few thoughts on volatility.
Really a lot of folks think (and I used to think so too) that there is some hidden chart pattern or indicator which can unlock the markets.
This is actually not true and there is a big proof of this hidden in the market action.
If someone, any one knew what the market was gonna do next then the volatility will always be constant. This is a huge clue that many do not think about. The fact that volatility is always changing, day by day, minute by minute is the biggest open secret that the markets are fundamentally “unknowable” but they can be reacted to with good risk to reward principles. Yet we all insist to spend insane effort on trying to know them rather than react to them?
A note about TSLA
With TSLA, I had a short term bullish bias and the earnings completely wrecked the stock price. What made it worse was fluffy guidance about future profits and margins.
TSLA crashed 12% today and closed at 182. What we saw with TSLA is the culmination of factors that I have been sharing here in the Stack for a while now. It is not that these risks and factors were not present before. It is just that more folks realize them now that which very few figured out months ago.
This same story will eventually play out with other names which defy gravity today. It is a matter of time.
The main issue with TSLA is not even the interest rates or the perceived lack of demand. I think there is enough demand. The main issue in my view is the CEO himself talking the stock down with his whole spiel on develop AI on a different company. This is what demoralized most of longer term bulls.
Now, I have had a longer term downside target on TSLA at 140, when it was trading 270. While I did not think at that time was that it will take this path to get here, it certainly got closer to this target after the action today.
In the short term, I think TSLA will run into resistance near 200. This was a key level for me and we closed below it and looks like we will close the week and next week below as well. So this level could cap any attempts to rally.
Longer term however, I think closer TSLA gets to that 140, more desirable it becomes from a long term investment time frames for me personally. With technology, that range issues will be ironed out over next 4-5 years, I think EV will commonly have 500 miles or more range. TSLA is poised to benefit from extensive connectivity and networking capability of its cars. I think TESLA is doing much more transformative work than any of its brethren in the tech industry. However, this transformational nature is hard to see now, muddled by bad QoQ operating margin numbers.
TSLQ
Talking of ETFs, TSLQ is the inverse TSLA ETF. It goes up if Tesla goes down and vice versa.
I think action on this looks robust and it could be supported on any dips. It is about 37 now but could head higher into 40-42 as long as it holds 34-35 area.
NKLA
If you have been following the stocks for longer than a couple of years, you probably know NKLA used to be almost a 100 dollar stock in 2020 and is now trading at 70 cents.
I think recent swing lows on this around 50 cents could be an important LIS (line in sand) on NKLA and if it holds $0.5, it could move up to $2+.
Levels for tomorrow
PCE day. So expect the event to drive flows for rest of the day and could bring some volatility.
Normally I do not like to do a super formal plan on these days and instead use the chat room to update levels during the session, but here are few thoughts.
Generally I think the bears need to take out 4890 for a bigger damage to the downside.
I think 4890 as long as it holds, could offer some support for a move back into 4920s.
My edge case for tomorrow will be above 4930 or below 4860. In particular, if we are able to take out 4890 on the downside, I think 4860-4867 could be next intraday support. At time of this post we last traded 4915.
As always if I see anything worth sharing on the tape, I will share via the Substack chat room.
I am inclined to think that this tape is supportive of the market headed into the FOMC on Wednesday. Remember from my weekly plan, this whole 4800 zone is very important for next couple of months’ prognosis. So I think if there is going to be a deeper sell off, it probably comes on Wednesday or after rather than what is left of this week and the next between now and the 31st.
Much more to come, stay tuned and join us.
~ tic
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