Sell the rallies?
Daily Plan 2.28.25
Hey traders-
So what you have at the moment in this market are pockets of value and at the same time you do still have some fluff.
So for example, an AMZN here so close to 200, GOOG at 160, NVDA now inch from 110 these I think are good values but it may not be without some more volatility in near term due to this being an extremely emotional market.
I own these, I will add more on dips; AMZN is a 30 PE but it is a great capital allocator at 30 PE. GOOG now is at a 16 forward PE! So I do think if I have a multi year time frame, these are some good values.
Now you could argue that something like TSLA remains in a fantasy land even at 280- with sales crashing on every continent, this company is getting billions in dollars in contracts from this admin and yet can’t find a bid! We warned our folks to steer clear of this at 420-430 only last month.
On the emini S&P500 side, the rallies have been short lived whether that is that 6060 level or our 6022 level we shared only a day ago as resistance- each one of these is selling off.
As far as the session goes tomorrow, keep an eye out on this 5942 level. It kind of gave up without much fight in latter half of the session so could be key tomorrow.
If you zoom out, you see 5800 right below as potentially an important support. If we do not hold this, I think we have a bigger problem at hands. Slightly longer term, I will like to see 5800 hold for a move back into the 6022 area as a swing short.
While it is easy to dismiss this sell off as we are nearing a major support at 5800, there are a couple of key lingering questions:
Is this market action intentional? Is this to implement agenda around economy, global commerce, immigration? Could this be a means to cool down inflation? So these are some important drivers which cannot be ignored even though we are near a major support. If this is true, you are then fighting against much larger forces at play here.
Trump has been conspicuously absent from remarking at all about the current state of stock market so there is a reasonable chance that some of this may be engineered. Then you have all these billionaire types cozying up to 1600 Pennsylvania Avenue. In my lifetime I have never seen anything like this frankly! Atleast never so openly. From Zuck to Muck to Bezos to Sundar. Like what is driving this ? What is the driver here? Is there some fundamental weakness in business they are trying to compensate for, is there some other risk or threat to their business they are trying to fend off? These guys folded like an omelette which raises another can of worms as to why.
Levels for tomorrow
Scenario 1: We could see some resistance come in near 5942 if tested for a move down into some of the lows today near 5904 or so.
Scenario 2: I will say this 5904 right above us could also be a key level. If we are able to remain above this in the session, we could retest 5940. This is a plus. However if we remain below 5904, I think this market could remain offered and can try and retest 5820s.
5780-5800, unless broken remains a formidable swing time frame support for a move potentially back into 6000 or so.
Now outside of intraday trades in the indices, I do think some of these stocks do look quite attractive here with a major caveat about position sizing- I will personally DCA into some of these names rather than go all in at any given level if it is for longer investment time frames. You have HOOD here in 40s now, you have COIN almost sub 200, GOOG now at almost 160, AMZN 200, SBUX here at 113, these in my view represent good value if I am beginning to DCA into some of these for the first time. I will share a full list of these names I love around which levels in my weekend post for the subscribers.
To summarize:
The market remains in sell the rallies mode. While we are close to a major support at 5800, there will be great long opportunities once it is confirmed that the worst of sell off is behind us. To get a head start, how about we close back above atleast one of the support turned resistances like 5942? Or how about we close the week tomorrow here above 5870?
I am seeing some good value in some names which I shared above and if I own any of these here, I expect there could be more volatility in days ahead and my position sizing and time frames reflect that. This 5800 is a very important level and if we hold this, these stocks can retrace back to their recent highs. But if we start folding below 5800, I am cognizant and prepared that these leading stocks can shed another 10-15%.
~ toc
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