The Markets
At 2:05 PM on March 13, the Thursday Market Update hit your inboxes, laying out a strong case for a bounce.
As it turns out, 15 minutes before that, at about 1:50 PM, SPY and QQQ had put in a short-term bottom, and we now have confirmation that the bounce had started.
Those ETFs are up 3.6% and 4.16% at the highs of the afternoon today.
Charts don’t predict the future. But they do help you formulate actionable ideas while stacking the odds in your favor and properly managing risk.
Sometimes, the ideas don’t work, and the importance of good risk management is reinforced. Sometimes, the ideas work after a bit of delay or a test of patience. And sometimes they work right away.
It’s nice when that happens. But, it’s quickly in the past.
The important thing — what’s next?
Here are two charts today to check on the bounce and see what may be coming.
Before we go to the charts:
I had a great conversation with my friend Jake Wujastyk, colleague David Prince, and a new friend, Jeremy Newsome, and six thousand listeners yesterday on an X Space hosted by Jake. We talked about stocks, charts, panic, China, and more.
Everyone shared great insights about not only the market but the process of trading, how to do it best, and the psychology involved.
There is a recording available if you’d like to hear it.
⬇️ Click this link ⬇️
The Charts
SPY bounced almost perfectly from the 50% retracement of the move from the April ‘24 - Dec. ‘24 move. Now, it’s back above the 8-day MA and nearing the 200-day MA. The bounce happened.
Could it have more in the tank? Sure.
Could it go back down and make new lows? You bet.
On further upside, we have several spots to watch for potential resistance.
The 200-day MA near $572.74
The January pivot low at $575.35
The AVWAP from the recent highs, currently near $578.49
The 21-day MA, which will move down closer to those levels in the coming days
QQQ has bounced as well, is over its 8-day MA, and has similar potential resistance levels.
200-day MA near $493.42
The 61.8% Fibonacci level at $494.95
AVWAP from the recent pivot high near $496.04
And finally, the 21-day MA is declining to eventually meet each of those levels.
The Trade
In a quick market, these are the kinds of moves that can pay the bills.
Active traders will be much smaller in long positions now after adding into the dip on Thursday. Trim and trail — aka, sell some and hope you're wrong.
FOMC on Wednesday will have an effect. We’ll find out soon enough if this bounce can last or if new longs are in store. No changes are expected for interest rate policy. But what does Jerome Powell say in his press conference?
That will be the key.
Trade ‘em well. And always manage your risk.
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The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
I hope you and Jake do more of those. 6,000 wow. Man, there must be even more retail interest than when I started… which wasn’t long…