Daily Plan 6.6.24
Hey guys -
We opened a few points above the key level 5320 today, briefly dipped to 5300 and then regained 5320 before a large push higher into 5370.
How do we know if a level is holding or not? I have covered this in detail before, but in summary, I use 5 to 15 minute auctions for intraday. If there are consecutive closes above a level, I take that as a level is holding. If there are consecutive closes below a level, I view that as level giving up.
In Image below you can see not only consecutive closes above 5320 but also higher highs and higher lows of these closes. This is a classic uni-nodal auction.
Ultimately the time frame chosen to validate if a level is holding or folding dictates the risk. If it is 15 points then that may be 5-6 points, if it one hour auction then that may be 9-10 dollars.
LULU
About 10 days ago when LULU was around 320, I shared below note and a support level on LULU.
If you zoom out into your charts, you can see the swing low of LULU was about a dollar or so below $292. Today was a tremendous day for LULU having risen to 340 at time of this post.
GME
GME also had an excellent day today, rising about 20%. I have been a GME bull since $12 but about a couple of days ago, I shared below update on GME.
ZIM
ZIM was another name shared by me about 14 days ago where my $24 target was almost met today. Again if you zoom out on ZIM charts you will see the swing low at 16 bucks or so.
MU
Similarly about 3 weeks ago I shared my 135 dollar target on MU on 5/10 and is now at target.
All of these ideas are shared with our subscribers regularly.
Levels for tomorrow
Now the auction today was technically a breakout. However personally I assign more importance to breakouts that go further above recent breakout levels like this and this tends to provide support to the market when there is a pullback.
In this instance, at 5370, we are about 7-8 points above this breakout point. This is a fresh breakout and I think for further gains the bulls will need to continue to build on this momentum either overnight or early tomorrow AM.
Can this breakout hold?
There are 2 ways to look at it. On April 19, SPX made a swing low around 5050 and is now up about 6% off that low. Most of these gains have come, in fact more than half of these gains in the index have come from NVDA in a 8 week period. So the question to ask is NVDA today worth a trillion dollars more than it was the week of 4/19? And if so, are other mega caps like AAPL, MSFT going to join this rally?
Whether they do or they not, I think NVDA is headed to replace MSFT as the most valuable company here in the US very shortly. In the short term, I think this may help benefit other SOX stocks like AMD which is now about 166. Another important thing to note is that Bank of Canada today started the ball rolling when it comes to global interest rate cutting. This will tomorrow will be followed by the ECB which will start cutting rates tomorrow. FED has been lagging so far but I have called for the first rate cut by this FED before September. These are all coordinated maneuvers to prepare and influence the 2024 elections here in the US. This is why you see even though FED is behind every major central bank in rate cuts, the Dollar has stubbornly remained below my key resistance level at 106. Give it a few more weeks and Powell will be singing a very different tune! And along with that, the risk-on markets will also be singing a very different tune.
Key level tomorrow for me will be 5346-5350.
Scenario 1: 5346 if tested could provide support for a move back to 5370.
Scenario 2: If we open or close below 5346 on intraday time frames, we could test the weekly level at 5320-5322.
On a parting note, even though deflationary episodes are bad for Gold, and if you believe the Central bankers, inflation is already over else why would they be cutting rates- Gold and Silver are showing exceptional resilience here at 2350 and $30 respectively. Further losses in Dollar should help these both. Oil is a bit of victim of politics. I do think that the powers that be will try their best to cap any gains in Oil until the US elections in November. Once elections go through, I think Oil and other commodities like Uranium, Copper etc are set to explode much higher.
~ tic
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