Is the Bull Market Dead
Daily Plan 3.6.24
Everything we do as traders boils down to price action and orderflow.
This is true when the price confirms what we think it should do as well as when it does not do what we think it must do.
Today was no exception.
Primary expectation was to see us sell down from 5140 into 5090 area, which came fairly early on in the session. Once we began trading below 5090, we traded down to 5060 within a couple of hours.
This 5060 has been a strong support from last several sessions and it was no surprise we rallied hard from here.
In the last few minutes of trading we saw about a 1% rally from the lows to close the day near 5090, helped in bit by CRWD.
CRWD is an older orderflow stock which I shared at 200 dollars and today saw a 25% rally after hours to close near 370 after its earnings.
Levels for tomorrow
While I think the action at the lows today at 5060 was expected, what was not expected for me was the action at 5100 this AM. I did not expect this support to give up with so little fight.
I also believed AAPL to hold better at 175 than it did, and did not see 170 trade this week. In the weekly plan I shared how either AAPL needs to reclaim 180 or NQ will lose its breakout above 18000, but both can not hold at the same time and this is exactly how it went down in the session today.
Now, this is creating a tug of war between a narrative that AI fueled rally in stocks like NVDA is enough to keep S&P500 perched higher and that NVDA and other SOX stocks are creating a new set of leaders which can take NDX and SPX to new heights.
I beg to differ.
I think unless AAPL soon begins consolidating here and actually starts rising again, I think we are in for a bumpy ride ahead. Let me put it this way, had it not been for NVDA, this AAPL price action alone will be very bearish for the entire market.
You can see this in last 2-3 weeks of auctions in SPX as well as NDX. These markets have really gone nowhere in 15+ days, whereas NVDA has staged a very impressive rally from its pre ER lows. The way I read this is that the dip buyers have stepped in but in last month or so, the dip buying has not really worked, atleast when it comes to the main indices.
Note the levels quoted are still from the March Emini and NQ contracts and before I rollover I need to adjust some levels, so I will update when I do rollover to June.
For the session tomorrow, 18000 will be my key level in NQ and 5100. Just look at this high volume auction on the session today. I think the reason for this is that a lot of folks, including me were surprised at break of 5100 today.
Whenever you have moves like this, they need to be closely examined and in this instance, what is key is that the bulls will have to take back 5100 to repair this damage.
We are now trading around 5090.
Scenario 1: I think we could see bearish pressure remain below 5100, and my potential target will be recent weekly lows near 5046.
Scenario 2: I need to observe what kind of orderflow we get if we are able to take out 5100. If this holds, we could retrace up to 5116-5118.
Do not forget tomorrow is FED Chair speak and he will be grilled quite extensively about not cutting rates as a lot of politicians are focussed on their voting base struggling with high interest rate costs. Powell has been nonchalant on previous instances about the impact his statements have on risk-on assets but with recent uptick in inflation data, he may be forced to be more circumvent this time around.
~ tic
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