Daily Plan 1.8.25
Alright traders-
A lot to unpack. First off, with the emini levels today, our levels worked quite well albeit there was a lot of volatility in the session.
We saw an overnight bounce at 6012 which took us right back almost into 6050 where the cash session opened.
In the cash session, we did not hold 6012 and this support became resistance for rest of the session. On the downside, we saw good support near 5970 which saw us at one point retrace back to the 6012 area, fail and then drop right into 5930s. See Chart A below where there was a ton of action wrapped around our levels.
The backdrop of day’s action was a) from fresh new highs in longer dated yields which I have been calling for with the ten year hitting 4.7% b) jobs data which showed a slowing down of the labor market.
I also assign some of the surging yields to commentary from President Elect which was from a wide ranging conference today- from wanting to acquire Greenland and Panama Canal to rechristening Gulf of Mexico to lamenting not liking the drip-drip of electric water heaters.
The President also demanded he would like the yields to be lower. These yields are a big issue down the road for all sort of stakeholders- whether that is the local economy, the markets, global commerce as well as you and I. The problem is the bond market has a mind of its own. Unlike stocks, you can only pump it so much, there is no CEO of the bond market, there is no share buybacks, there is no hype around it. If you don’t believe it , you just had the FED cut rates by 1% and the bond yields rise by more than a percent!
While Denmark nominally is not the biggest of trading partners of the US, Trump’s plan is a plan on a vast canvas. So the markets run with it and the first thought is where’s all this funding going to come from? Is it more treasury sales and if so, it has to come at a higher price in terms of yields.
Whether you agree or not, this volatility is here to stay. We now have a permanent range expansion since November where 2 way moves intraday of several dozen handles now just are the norm.
On the equity side, I don’t think that the bull market is dead yet. What do I mean by that? If you hold NVDA at 120, if you own PLTR sub 30, you are like “what bear market”? But if you recently bought NVDA at 150 or PLTR at 80, you are sweating a little.
I do want to state that a lot of these stocks, most of these stocks are way above our initial buy points. If you are a regular reader, you will know this. TSLA at 430 is not the same as TSLA at 200. NVDA at 150 is not the same as 125 and AAPL at 260 is not the same as AAPL at 200! These stocks are no longer in accumulation zone where I shared them months and a year ago. They are all in mark up phase. Then you have some stocks like TSLA which are such a huge part of the options market that any weakness in them gets amplified to other areas as well. I have been warning about a little bit of fluff in TSLA since it was 480 and today at 395, this caution seems warranted in hindsight.
Levels for tomorrow
So if we leverage the weekly plan again, that 6034 did prove to be insurmountable and at time of this post we are last trading that tertiary weekly level at 5956. Zooming out, we have an important low right below us at 5865. If we are going to take this low out, we are now an inch away from election night lows.
So I think the latter part of the selling today came on break of that 5982 as well the boat getting too heavy on NVDA. Now with NVDA, I think it still remains in play for the bulls and if I were to pick a level, I will say 134-135 could be an intermediate support level. Then you have similar frothiness issues with the likes of PLTR which again sold off quite a bit heavy to close at 69. I think 67-68 remains a possible intermediate support on PLTR with much stronger support kicking in at 60. Note these are intermediate support levels. So if I am buying these I am not going full line at these levels knowing the major support is below them.
Back to the emini, if we are going to take out these lows near 5865, we are probably going to shed another 5-6% on the index. So from bulls’ perspective this remains a key support.
Scenario 1: In the cash session, if we trade 5911, I will like to buy this for a move back into 5940s.
Scenario 2: If we do not hold 5911, this could break into 5865 which could be supported for a move back into 5903-5911.
I may share additional levels in the chat room below. I think the OPEN tomorrow in cash session will be key. At the moment I think a cash open here above 5950s, which then swiftly takes out 5982 AND stays above it a pretty good development for the bulls. Minus this, I see 5865-5900 area remain in cross hairs and I see this as a good support for swing time frames as long as we remain above it with no weekly/daily closes below this zone.
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