Sellers finally had the opportunity to show their strength last session with an abundance of reversals taking place at key areas.
There was no denying that signs of excess bullishness and frothiness were starting to show up in the market - we were blessed with a period of “easy money” through a more conducive market environment.
As traders, it is our responsibility to:
Recognize such environments
Idenitfy opportunities fitting our trading styles that allow us to get involved with such an environment
Contrary to popular belief, stocks do not only go up.
Thus, if you feel that you may have missed the last few weeks of a supportive environment, the last thing you want to do here is start forcing trades by taking sub-par setups.
At the end of the day, a genuine understanding that there will always be another trade is a great way of dealing with FOMO and avoiding forced trades - truly having faith in your system should remove any possibility of falling victim to FOMO, understand the statistical distribution of your process by knowing the truth about your trading.
The ability to wait for favorable conditions is a super power to achieving success in trading.
Recent Earnings Gappers
Several poor daily closing ranges around the board for stocks that gapped-up yesterday - market weakness had a large say in this:
Several breakout failures seen on the session:
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General Market Overview
Important to keep in mind that we have made large moves across the board and so weakness should be more than expected to show up eventually. No need to go completely on/off or bull/bear - understand the overall market structure and how occasional weakness is needed.
SPY 0.00%↑ Reversal on the session to close with this bearish engulfing candle - nothing broken just yet, simply showing evidence of weakness. Bright side is that this tested and held the 10EMA - watching for this low to hold in the short term and see if we can tighten up once more after this tried to push out prematurely:
QQQ 0.00%↑ Not quite a bearish engulfing but similarly this tried to push out from its most recent range but eventually struggled to hold onto the gap-up. Eventually lost the 10EMA to go on to close negative on the session and below this KMA:
IWM 0.00%↑ Seems to be pinned down by the 197 spot and telling us it needs more time before attempting another push through. Ends the session near the lows and closed right below the 10EMA:
ARKK 0.00%↑ Testing support right at the 20EMA after a recent large base breakout - BIG bearish engulfing candle and will be watching for a potential turn off this moving average:
Leading Stocks Analysis
I am linking the leaders watchlist in tradingview for your convenience, here
ACLS 0.00%↑ Tries to get going out of this sound base however struggled to close strong on the session due to general market weakness. Watching for this to hold last session’s low as has been a strong trending name:
NVDA 0.00%↑ Didn’t even pull in fully to the 20EMA before finding buyers and pushing up through this descending trend line a few days ago. Reversed last session to give back most of the intraday gains but still trending above the 10EMA so far:
IOT 0.00%↑ Still struggling to get going here and may be pinned down by the convergence of the 10/20EMAs right above price. Watching for the 50DMA to provide support and eventually tighten up:
U 0.00%↑ Still at the important 20EMA here and was expecting this to push off this area with some strength, however this too ended up reversing intraday with general market weakness to close weak near the lows of the session:
APLD 0.00%↑ Has been very strong since its most recent earnings reaction with an initial +13.7% close followed up by a +16.6% session. Now tightening up over the last 2 sessions and watching for a flag to set up:
TSLA 0.00%↑ Rejected by the moving averages once more and now seems to be trending cleanly to the downside since the earnings report gap-down a few sessions ago:
In the following sections of the daily plan I go over additional research in preparation for the next session:
✅ Individual sector analysis
✅ 4 Scans with results to get stocks with leadership qualities on our radar
✅ Personal Portfolio Update
✅ Stocks currently on my focus list with actionable trade ideas - The best setups from a risk/reward perspective
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