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12/17/23 – Sunday Stock Talk Write Up

What does the market have in store for us this upcoming week? What are the important support & resistance levels to be aware of? Read the Sunday Stock Talk Write Up to find out.

As we get ready for a new week here in the markets I think there is one thing in which we should stress a bit in the Sunday prep. That is…

What worked for us last week.

Monday was a no trade day with FOMC coming up on Wednesday and OPEX I wasn’t expecting much from the day, and just stayed away from the desk. It turned out to be a pretty impressive trend day with all things considered.

Then on Tuesday after the Monday rally I was looking for a pullback into 16429.75 for the NQ and 4672.25 for the ES. We dipped a bit further under those levels than I would really like to see, but there was a divergence just under the level that was established. This allowed us to pick up longs right near the low of the day with the signal there in NQ.

Wednesday. FOMC Day. The object of the game every FOMC Day is if something sets up that is decent by 11am then take it. Otherwise we don’t press anything, and we wait for after the announcement to see what ends up happening. Just after 10am we get a divergence out of the ES that gives us a perfect opportunity for a scalp up into the high of day. This is about as close to scalping as I will get considering the first 45 minutes of the day we only had a 7 point range in the ES. Of which we were able to capture 4 points of that total range, and then sit on hands for the FOMC announcement.

Thursday we saw a MASSIVE gap up in the RTY overnight, but the other markets were not quite as excited. We are talking almost 3% on the gap up, compared to only about 50 points of a gap out of the Dow. This stood out and I wrote in the brain dump channel
“The RTY is up about 2% here this morning which is far out pacing any other index here this morning. That will be my guide for whether we ultimately end up fading or holding and trying to push higher today.”

 

This means I was open to some potential shorts on the day, and just before 10am we set a nice divergence in the NQ that opened up the RTY for a short that worked out for 8 points in just about 8 minutes.

After going 3/3 on divergence trades I was not about to give any back on Friday so we took the day off. It was also OPEX and all of that fun stuff.

Now for this week I’m looking at a couple different things.

We have some levels in the ES at 4786.75 above, and 4758 above. NQ has a level above at 16,876.50 as well which I think will probably get tested.

The question becomes whether we can get above that and the 86.75 level for the ES. IF we rally up and tag those levels early on Monday/Tuesday, and then we fail to hold above then we could see some selling into the end of the week.

It is also possible that we pop above them, fake lower, and then just go sideways to make for a really boring week. I’m not ruling this out, and if we start to see some early signs of this then I might just break out the eggnog early and wait around for Santa to ask him some questions about his beard.

In terms of earnings we do have a couple of names on the board that could be worth a watch.

$FDX $MU $KMX $PAYX & $NKE

$COST broke to new ATH last week, and with earnings giving it a big push on Friday I could see some nice continuation out of this, and a pullback to 653.90 with a market that isn’t falling apart and I like longs. 

 

$CRM has that look, and I could see a push over 262.09 that holds being buyable this week.

 

$RH isn’t my favorite name to trade, and it’s typically a bit thinner than I prefer, but a daily 1-2-3 in there could get interested on the week.

 

$ROKU caught some weakness on Thursday and Friday so it makes the weak watch list at the moment.

 

Monday we take it slow and easy. Let the trades come to us, and remember we only have a few more trading days of 2023 left so there is no hero stuff.

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