Daily Plan 9/29 '22
Are we out of danger?
Traders-
Let this day be a another good reminder what OrderFlow remains one of the more potent methodologies there is. This is why I say at times the message of the tape may seem like out of resonance with the majority view but there is a method to the madness.
Overnight, we saw my levels trade down into 3610-3620 but we could not hold these lows.
In fact close to 3610 was the exact low of the night before a 110 point rally.
We opened at 3670. This is before the open I sent the tweet below that I expected the market to be lopsided on the short side from last night and I expected some sort of short squeeze at the open.
Well squeeze we did and we traded all the way up to 3720 at time of this post.
I do want to address the fact that I have not yet turned a bull on longer time frames. Longer time frames as in are we about to make new 52 week highs any time soon?
No, I do not think so. My call is simply in context of another counter trend rally not a market bottom call.
When do we bottom?
I do not know but if I were to take a guess, I will like to see two things happen:
S&P500 trade down into a 14-15 multiple, right now it is around 18.
Stocks like AAPL and TSLA shed a bit more. In particular I want to see AAPL trade down near 100 for me to feel confident that a longer term low now may be in pace.
Obviously other factors will matter. For example is the FED now ready to panic and unleash another QE? Too much uncertainty to predict that at this very moment.
But I would think may be a loss of another 10-15% may get us close to that point.
At end of the day it comes down to the time frame.
If my time frame is 10, 20-30 years and I am accumulating an index for passive income , then 3600 is not a bad place for me to start or add IMHO.
If I am looking at next 1-2 or even next 3 years, then may be I am not so sure.
The audience for me saying this is not some one trading intraday, those guys should focus on the Daily Plan levels and scenarios instead, but this is really for the investor in me.
The main reason I am not yet convinced we bottom yet is the stocks like AAPL and TSLA. I do not see personally how very well run companies like ADBE, AMD and HD for instance are down 40-50% or more on the year and yet high flying consumer stuff like AAPL will escape this fate in months and quarters to come?
On the flip side, yes a counter trend rally is possible as when the central bankers see their game is up due to a crash in bonds, they may start some sort of relief for these beaten down bonds. Remember we still have very loose fiscal policies and they need to borrow to fund these welfare programs- aka take on debt. The last thing they want to see is a loss of confidence in these government bonds like the Gilts and this is exactly what we saw today with the Bank of England. You get TLT below a 100 and I think the FED will not be far behind. Impressive rally in TLT though today up 3%.
Another very good play shared by me was the support in Oil which we are now up almost 500 pips up from. Healthcare stocks also did very well today, one of my personally favorite sectors right now. Gold and silver also had a good day while dollar slumped.
See this link here for the weekly plan and the range: link
Trade well, stay nimble. If you have not already consider subscribing to my letter below before the price hikes.
My levels for tomorrow:
The close is kind of key today and I would like to see a close above 3700 if this rally is to have legs IMO.
You also have to be cognizant of the Friday’s PCE index number.
As alluded by me last night, we are stuck in this range of 3650-3720 and I think a resolution may come on Friday.
