Daily Plan 5/25 '22

Mixed tape

Folks-

There are two ways to look at the current situation.

**Scenario 1 target 🎯 was achieved within session today. 3933 may be used as the new LIS for bullish continuation. 3890 Scenario 1 support still valid with intermediate LIS at 3933. Now 3952***

With the relative strength in the S&P500 compared to related markets in last couple of weeks, you could say either this shows that the selloff is over or the selloff in mega caps, the FANGS have much deeper to go. Today’s action smacked of rotation from whatever is left of the tech into value- could be a little late in the cycle.

Personally, I think as long as we are able to fend off this 3850 zone, and if we can avoid a close below it, I favor a retrace up to ~ 4100/4200 before longer term sellers engage again. So I think longer term the range narrative between 3850-4200 remains alive as long as we do not lose that 3850. Shorter term levels are below. Scroll down. This is in line with what I share in my weekly plan: Weekly Plan

If 3850 were to break, I can see some softness develop but I continue to believe that 3666-3700 may be decent support for rest of the year, if we were to get there.

I have been busy keeping my ears close to the tape, trading the volatility and what is coming out of the WEF, in Davos. A few themes that have emerged for me in last couple of days:

1. There is really no coherent plan to bring inflation, particular food and energy inflation down. I think the World as a whole is a hostage to this axis that has developed between OPEC, Russia and China as far as I am able to decipher the energy markets going forward. I think the energy cost remains elevated and this is the price we will all pay for this lack of action on energy policy.

2. The Central Bankers are in a mad dash to verbally outdo each other when it comes to being hawkish. In reality will they do any thing or not is up for debate. However , in the short term the plan seems to be to deflate the average 401K and the plan seems to be working. Even with the S&P500 and the bonds going no where for most part last couple of weeks, the individual stock is not so lucky.

SPY WEEKLY nowhere to go

For intraday auction, Scenario 2 today was spot on. We opened at 3930 and pretty much stayed below the open for all day. We sold down to my bear target and the auction stalled (at time of this post). We then made an attempt to rally all the way up to 3930 but failed to take it out. From a weekly plan perspective, the action has played out as expected. I expected weekly plan time frame 3950 to be a resistance and 3850 as potential support. This week, as of Tuesday so far, 3850 has been close to the lows, 3950 was briefly taken out yesterday only to fall back within later. Today’s session, 3950 was high of the day and overnight session per scenario 2.

Tic TOP was entirely negative, like -6% but then found relief once we got to the lows around 3890 my target.

Day to day, yesterday’s action threw me off as I expected the 3950 breakout to hold . The close looked quite good yesterday to me- while there are no post mortems in speculation and markets, the SNAP news did SNAP the market. This may show lack of confidence and the added to the action today in the mix, this could potentially show some sort of short term capitulation.

From my weekly plan

NVDA which I was expecting 150s after the earnings came very close to those levels today from the Friday close. This is pretty much to the lower end of my expected range post earnings. SOX prices in general seem low.. like if you are an AMD bear, what is your target ? 72? MU? 60? NVDA? 130? My LIS in NVDA will be 145-150 post ER, I think it is quite oversold and can get to 180 or 185 post ER.

ZM was also a good call by me in the weekend letter where I did not see a point in being a bear so close to that 87. Both ZM AND COST were green in a sea of red today. It is trading now 94 but that is a large part due to SNAP and the market. It was up as high as 110 post ER. Orderflow again avoids these common mistakes like shorting a stock which is down 80% and under accumulation.

COST turned out to be front running me and was one of the only few greens today in a sea of red. It is now about 15 handles up from my 416 weekend print and is now 432. I remain a bull on COST if it dipped into sub 400. 390. Costco is one of the best American companies IMO and I will be a bullish on it if it dipped.

Levels for tomorrow:

There is no change to my medium term thesis about a new range forming here 3850-4200 as long as no D1 close below 3850. We are now trading around 3890. Here are my main scenarios for tomorrow:

1. If we open or bid above 3890/3900, I think we can try to test 3950 again. This range may form between 3890-3950, which if broken, IMO, may be able to trade 4010 afterwards.

2. Open or offers below 3890 may target recent lows at 3850 where we may be able to find some support. Overall favoring range bound action at this moment. This may be void if we opened below 3890 , broke 3850 and are trading a -3 or a -4 on the Tic TOP. Yes that would be the key risk off indicator for me and may signal the range has been violated.

3. At time of this post we traded 3890.

4. I will always confirm the action with what is Tic TOP indicator doing and where is TICK/TRIN etc . Read the educational post here if not sure: Tic TOP

5. Profile chart was inconclusive for me today and did not inform me if bears or bulls have any edge. This is often the case before major moves are pending. If chart changes any meaningful way later in the night I may send out a separate note.

One name that crossed my radar was that of APPS.

This was shared by me in 2020 /2021 around 10 before it massively jumped to over a 100 bucks. It is now down to 22. They report on the 31st and I want to keep an eye on 19/20 in case it were to drop as potential buy. Their forward PE is like at 6!

APPS Daily

Released the plan a bit early as I will be on road due to the long weekend and wanted to send some thoughts out at least before I shut down.

Stay safe. Stay nimble.

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~ Tic Toc

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