Before the Bell Dec 28

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Tickers:  SPY QQQ IWM FB AAPL TSLA  AAPL AMZN NFLX GOOGL SMH

Before the Bell  is premarket prep for active traders. The note provides detailed stock market technical analysis focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Inspiration – Ask for Help

Most people think asking for help is sign of weakness and comes from someone lacking in self-confidence.  It turns out those people are wrong. Asking for help is one of the biggest signs of strength one can show.  It shows an eagerness to grow, but also by extension, the willingness to toss aside an old process in favor of something new.  It’s the virtual cycle of growth.

In the latest episode of Tom Brady’s Podcast “Let’s Go”, Tom was asked if many players come to him for advice on how to give their bodies the best opportunity to extend their career. After all, Brady is playing high-level pro football at 44 years of age.  Brady replied to the question by saying “not as many as you’d think”.  Yes, you’d think there would be a line around his house of players seeking his advice on fitness routines. Guess Not.

Resist adopting a rigid approach to trading. The market is always changing.  Maybe a goal for 2022 is a commitment to change with it. To seek and nurture a close circle of mentors that can assist you in that effort. Ask for help. You will be pleasantly surprised how many people will share ideas with you to light your path.

Earnings 

No Earnings this week.

Companion Video  

 Will Return Soon      

Macro Data Releases Week of Dec 27

  • Monday –
  • Tuesday – Case Shiller; House Price Index; Richmond Fed
  • Wednesday – International Trade figures; Retail & Wholesale inventories; Pending home sales; oil inventory
  • Thursday – Jobless Claims; Chicago FED; NatGas inventory
  • Friday – Nothing

All Aboard Santa’s Sleigh

After several days of solid advances, the premarket futures are green as prices look to extend the Santa rally. No reason not to trust the charts. Remain bullish through this week unless price gives a signal to change our minds.  THat said, the oscillators have moved sharply higher. I have them shown below. We’ll need to monitor them more closely toward the back half of the week .

Throughout the commentary this morning I’ve encouraged you to roll your strikes and stops higher at logical places on whatever you’re trading. Get in the habit of getting paid for being long and being right. Don’t sit and wait with big embedded gains for a big red bar to take back a chunk. Ride the wave higher and get paid along the way.

Re-Post Technical Trading Cheat Codes.

Received a lot of positive feedback on the TA Cheat Codes.  Will leave it up for a day or two for those that either missed it or have not had a chance to Clip it.  It might be a nice way to start your own TA Cheat code / decision-making tree.  You can then modify over time as you customize the general rules to your own trading style.

In your trading, keep the active trading game plan at your fingertips.  Keep in mind this is a cheat sheet and not meant to applicable to every situation imaginable. THat said, the rule set should keep you out of major trouble…especially if you are newer to technical trading.

  • EMA Rules:
    • Price above all ema’s >> Full BULL
    • Price above the 20ema:  Bull look; buying a pull in to the 20ema, especially if there is technical support nearby, is often a good trade location for getting long.
    • Price between the 20 & 50 emas:  Tactically defensive.  Once the 20 is lost, the next move is either structural support or the 50ema. The chart is still bullish but care needs to be taken to only get long if price comes into support and stabilizes.
    • Price at the 50ema:   I think this a good level to use as a bull  / bear pivot.  Bullish if it holds; Bearish if it doesnt.
    • Price below the 50ema:  Defensive posture and potential shorting opportunity. Not much good happens below the 50ema.
    • Price at the 200ema.   Another key pivot location as it is the last chance for bulls to save the chart.
    • Price below all the moving averages:   Full BEAR
  • Trade level to level. 
    • Recapturing levels from below is bullish and represent buying opportunities.
    • Losing levels from above is bearish and represent selling opportunities.
  • Buy Support / Sell Resistance. 
    • If price moves into support and shows signs of stabilization it is a low-risk objective buying location w/ a stop just below.
    • If price moves into a well identified resistance area and the price advance stalls, it is an objective place to SELL with a stop just above resistance.
  • Breakouts and Breakdowns
    • Breakouts relative highs are buying opportunities
    • Breakdown below a prior low are selling opportunities.
    • In both cases set a stop near by and honor it.  This market has a lot of 2-way action.  Honoring your stop is the only way to prevent getting your face ripped off….a papercut seems more appealing.
  • Other tips on trading higher- vol environments
    • Trade smaller.  In higher-Vol environments you can make just as much as having a big position in a low vol market

Oscillators Race toward Overbought

There’s no need to panic here, but be advised that the oscillators have responded to the rally and are moving sharply higher. A few more days of healthy advances in the indexes will likely push these to 60 or higher. Keep this factoid in your narrative over the next few days. Stay bullish but scrape off profits at logical places on the charts by rolling your strikes / stops higher. You don’t want to be caught with a ton of embedded profits when the inevitable pull back happens. As always, time-frame is everything. Short time frame traders need to be much more mindful than someone looking out 3 months.

FATMAAN Key Levels

$FB

Stay long against $344 and look for a move to resistance at $354.  A break below $344 favors a move back to $340 first support.

$AAPL

Stay long against $179 and look for a breakout above $181 to all-time highs. If price breaks out and you’ve been long from lower levels or if you want to get long, you can move up your strikes and stay long against $181. A break back below $179 would favor a pull back to $176 first support.

$TSLA

Price kind of in no man’s land at $1093.  You can get long on a back touch of 1080 or on a breakout above 1120.  R1 above 1120 = 1150/1160 band.  S1 below 1080 = $1040

$MSFT

Use $345 as your pivot off the daily chart. THe measured move target coming off the double bottom at $322 is $365ish.  Like other tickers we’ve discussed, if you got long at lower levels and we get a breakout above $345 to all-time highs, move up your strikes and stay long. Those who are not in but want to be, get long on the breakout and shoot against $345. If the breakout stalls, I see S1 = 340.50 and S2 = 339 at the top of the prior gap.

$AMZN

Use $3380 as your pivot. Above look for $3440. A break back below $338 favors a move to S1 at $3340.

$GOOGL

Price has formed a nice tight bull flag. Top = $2960  Bottom = $2940  A break above targets R1 = 2980 then R2 = 3010.  A move below $2940 targets S1 = 2925  then S2 = 2900.  THis could potentially be a real nice set up given that price has already carved out a nice flag and is ready for the next leg higher.

$NFLX

Another flag set up. Flag high = 617.50  Flag low = 612.50.   A break higher targets R1 at $630 then R2 at $645.  A break lower out of the flag would favor a pull back to S1 = 605 then S2 at 597.50

$SMH

Price broke out of a $22 trading range and has a measured move target of $335.  Stay long against $312.50. Indicators are supportive of higher prices.

Market Insights

Fear Gauge:

Fear has moved from the low 20’s to 58 over the past week. Not extreme greed, but heading higher.  Another simple thing you can incorporate in your checklist of market internals you can keep an eye on.

 

January Flows

January is  big month for inflows for the market.  Doesn’t mean we necessarily do a moonshot, but there should be an underlying bid from all this money coming into markets.

 

Oil is recovering

THe oil ETF USO recaptured it’s 50ema yesterday and is now in a big gap. While the indicators RSI and PPO have not moved into their bullish regimes, they are rising and should be supportive of higher prices. Trader’s can be long against the 50ema and look for a gap fill.

INDEX CHARTS

A detailed walk-through of the levels and trading strategy for the indexes is given in the video ( link above) . The static charts are provided for reference. The FATMAAN names are also reviewed in the video along with trade ideas and other charts of interest.

SPY Daily

SPY has made a decisive break above $470 which had been a sticking point for weeks. The measured move target coming out of the $20 range is $490Stay long against $470.  I’m anticipating a flag to form in the days ahead but nothing to trade off of…..we’ll see how it plays out for the remainder of the week.

SPY 2 hour

QQQ Daily

The breakout from the $20 range targets $420 on a measured move basis. Unlike SPY we do have one last level of resistance before blue skies. THat level is $405.  On a breakout above $405 get long w/ a stop below. If you got long from lower levels, if /when $405 gets taken out, its the perfect spot to book profit on that position and roll up your strike to $405 and stay long.

QQQ 2 hour

IWM Daily

Small caps have been lagging on this upswing but I still see higher prices. A good level to shoot against is the 50ema and look for a move to the bottom of the gap. If price can enter the gap I think we go up to fill the gap to $231. Since we recently visited the bottom of the trading range at $210 the natural target is the top of the box at $232. THis aligns well with an eventual fill of the gap.

IWM 2 hour

 

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