One reason this market, especially QQQ (Tech) has been struggling is that the 8EMA is below the 21EMA on the daily chart. This has put downward pressure mixed with choppiness in between. It’s made it tough to trade on the long and short side overnight. In my opinion, the market is currently fit for day traders/scalpers. Those that are trading the intra-day momentum whether green or red day should be doing okay. Anyone holding options overnight has been getting chopped around both ways. I continue to stay cautious on the market especially with it’s current behaviors, and this makes it difficult to take any long swing plays that can be held for multiple days.
“BEAR WEEKS – START STRONG, END WEEK”
“BULL WEEKS – START WEAK, END STRONG”
I focus on QQQ / SPY / IWM heavily because a rising tide lifts all boats, or sinks them. If you see QQQ weak, and you know the top holdings are Tech, including: AAPL (12.25%) MSFT (9.13%) AMZN (8.88%) TSLA (4.50%) FB (3.57%) GOOG (3.14%) NVDA (2.67%) ADBE (2.27%) PYPL (1.98%) – then you can make a good case that those stocks will be red also. The percentage listed next to the ticker is each stocks WEIGHT of holdings % in the QQQ. (link: https://bit.ly/3rg1Rl4)
The QQQ is an ETF (exchange-traded fund) that tracks the Nasdaq-100 Index. So click here to find out what’s inside of that: https://www.dividendmax.com/market-index-constituents/nasdaq-100
Now, let’s dig into some charts and key levels to watch. I recommend setting price alerts for key levels to keep track of market/stock direction. Stay patient, and let the set-ups come to you. Remember, cash is a position aka “Doing nothing,” is ok.
Key levels to watch and set alerts on for QQQ:
321.09 – Tuesday’s high of day -> above opens up possibility of 323.85 / 324.20 / closing above these levels opens up the gap fill target above from 327.80 to 329.97 zone
316.38 – Tuesday’s low of day -> below opens up 315.21 -> then gap fill below to 313.14 – below this zone you have 311.87 -> 309.66 and 306.92
NOTE: RSI on daily is just below the 50 level. Above the 50,55,60 RSI = uptrend/bullish. Below 50, 45, 40 = BEARISH. Extreme oversold = 30 zone or below.
TSLA – Monday’s watchlist highlighted the gap zone below us on the daily chart, and it gravitated towards it by the end of day. We continue to trend slightly lower with choppiness in between. The real story is still this: the 8EMA is below the 21, and 55 EMA’s on the daily chart. This produces a downward bias with pops in between on tech stocks. Until we begin seeing the short term 8 EMA cross above the (21) and (55) above, it’s not super healthy to take long swing positions.
Key levels to watch and set alerts on for TSLA:
677.80 – Tuesday’s high of day -> above opens up 684.59 / 699.62 / 704 / 708 / 713.18 / 717.85 / 721 / 737- these levels aren’t possible without first building 700 support
657.51 – Tuesday’s low of day – below opens up March 19th lows of 646.60 to 624.62 / these levels would be important for the bulls to hold, as next support is low 600, towards 595.21 zone
NOTE: RSI is at approx 44.59 on the Daily, which is BEARISH. Again, risky to take long swings in this name until these conditions improve. Bullish momentum comes in above 50 / 55+ / 60+ on RSI. We are also BELOW the Ichimoku cloud on daily – bearish signal.
IWM – this ETF tracks a market-cap-weighted index of US small-cap stocks, aka the Russel 2000 [ticker: /RTY in futures]. This one was hit the hardest in Monday’s session, down 3.6% on the day. It’s beginning to form the start of an 8EMA curling under 21EMA. Hasn’t happened yet, but something to watch for. We also saw a bunch of IWM put flow, most notable 208PUT exp 5/21, which according to the chart below, a retest of most recent lows is not out of the question. For more info on what is held in IWM check this out: https://www.etf.com/IWM#overview Knowing this can help you find individual names to trade within the sector.
Key levels to watch and set alerts on:
223.86 – Tuesday’s high of day (will be tough IMO to get above this so soon after getting whacked today) -> above opens up 225.23 / 228.10
216.03 – Tuesday’s low of day -> below opens up a retest of recent lows at 210.91 / 209.43 / 207.21
SPY – this index is holding up the best versus IWM and QQQ so far. IF this one starts to weaken, watch out below. SPY has 496 holdings and tracks the S&P 500, which represent names in the Large Cap space. For more info on holdings check out: https://www.etf.com/SPY#overview You will notice an overlap with some tech names in this one, with AAPL, MSFT, AMZN, FB, GOOG, TSLA, BRK.B, JPM, JNJ being the top 10 holdings.
The 8EMA is still above the 21EMA compared to the QQQ / IWM. However, as we will see in the chart below, there are some short term notable momentum risks to the downside.
Key levels to watch and set alerts on SPY:
393.46 – Tuesday’s high of day -> above opens up 394.07 / 396.72 / 398.12
388.66 – Tuesday’s low of day -> below opens up 387.15 / 385.85 / 381.73
NOTE: RSI still slightly above 50. Bearish engulfing candle on the Daily. MACD momentum slowing and crossing down can add fuel to downside.