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End-of-Month Walk-Away? AMZN Slows the Rally
AAPL, MCD & BRK.B ring up gains for us.
Danny Riley
April 28, 2023
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Our View
The tech buyer showed up in force on Thursday. The NQ made a low yesterday at 13,013.50 and rallied more than 260 points to yesterday's day-session high. At the after-hours high, the NQ was up ~320 points from the low. The ES that recently traded 4068.75 rallied up to 4166.50 in 24 hours.
Simple rule of thumb: Until the trading range breaks, don’t sell after the ES has gone down and don't get overly bullish after it rallies. Until the ES breaks out, it’s a buy-the-dips and sell-the-rips kinda trading range. It was easy to see that Wednesday’s bank weakness was the main drag on the ES:
5-min KRE (Left), 5-min SPY (right) — 4/26
On the heels of Microsoft’s strong results, Meta delivered blockbuster earnings that sent tech ripping higher. When combined with a short-term oversold ES and NQ, and the end-of-the-month buying and options expiration, you get today’s type of response.
It was a perfect storm for a pop.
Our Lean
For today, remember yesterday’s Handelstats data point and how it points to Friday, a day the bears have dominated in late-April:
“Since 2008, the last trading day of April has been up 4 times and down 11. When the last trading day of April is on a Friday, it’s been bearish, closing lower 5 of the last 6 times.”
Our Lean: Today is the last trading day of April and while I think there will be two-way flow, my plan is to buy the early pullback, and sell the rip. The imbalance should be to buy, but beware of the “end-of-month walk away.”
4170 to 4180 is initial upside resistance in the ES, if we get there. On the downside, 4130-35 is initial support. If it fails, ~4118 is in play.
MiM and Daily Recap
ES 15-min recap
After falling 90 points in two days, the ES rallied up to 4105.75 on Globex and opened Thursday's regular session at 4100.25. After the open, the ES gradually rallied up to 4115.50 at 10:42, it pulled back to the VWAP at 4104.25 and then kickstarted a massive rally. From 11:00 to 3:00, the ES only had one 15-minute bar that closed lower, which was a a decline of 1.25 at 11:30.
The ES made more higher highs up to 4157.50 at 3:26 as the early imbalance showed $6 million to buy and traded 4155 as the 3:50 cash imbalance 'flipped' to $950 million to buy and traded up to 4164.75 at 4:01. After 4:00, the ES traded up to 4166.50 as META beat earnings expectations, traded down to 4155 and settled at 4158 on the 5:00 futures close, up 82 points or up 2.02%% on the day. The NQ settled at 13,260.75, up a whopping 373 points or up 2.89% on the day. Crude oil (CL) settled at $74.82, up 52 cents or 0.70%.
In the end, I really didn't get bearish for three reasons:
I continued to think the ES was still range bound
Everyone got bearish under 4100
(and the most important part) Friday is the last trading day of the monthly options expiration.
In terms of the ES’s overall tone, it closed on an up-tick and basically rallied all day as the session low came at 9:33. In terms of the ES’s overall trade, volume was lower at 1.62 million contracts traded.
MIM data
Technical Edge —
NYSE Breadth: 84% Upside Volume (!)
Advance/Decline: 79% Advance
VIX: ~$17.25 (easy come, easy go)
S&P 500 — ES
The S&P blew through yesterday’s high and ripped higher on the day.
ES Daily
Upside Levels: 4170, 4200, 4242
Downside levels: 4135, 4118, 4100-05, 4090
SPY
“Needs to regain $406 and hold above it to see a further boost.” — well we got our boost all right as the SPY blew through all of our upside targets.
SPY Daily
Upside Levels: $413, $415-$416
Downside Levels: $410, ~$407, $404
SPX
Upside Levels: 4143, 4165-70
Downside Levels: 4115, 4095, 4083, 4070
QQQ
QQQ Daily
We got our $317+ after the QQQ cleared two days worth of highs. But no one should be surprised where it ran out of steam, as $321 again kicked in as resistance.
If AMZN is a dud today like it was late in the AH’s session yesterday, then $321 could very well hold as resistance into the weekend.
Downside levels: $315, $313, $310
NQ
NQ Daily
Very similar situation to the QQQ, with the NQ being rejected right from ~13,300 resistance.
Upside Levels: 13,300
Downside levels: 13,135, 13,085, 13,020, 12,950
Guest Post
Our Friend Cary at Artec made a quick five-minute video on Feeder Cattle Futures. If you’re interested, please check it out here!
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
** = previous trade setup we are stalking.
Down to Runners in GE, CAH, LLY and ABBV.
AAPL — for those that were swinging AAPL for the longer timeframe, we got our $165 area to trim into and as we continue to tip-toe higher, I’d say down to ½ size here or even less.
a. Boom! There’s our $168.50+ on AAPL to get down to ⅓ or less. Add another runner to our list. Congrats to holders, this one took a little time.
b. For runners, raise stops to $163 for aggressive bulls, $165 for conservative players.
BRK.B — long from $319-ish as per the plan — Down to ½ at $325 to $325.25+ as per plan.
a. Down to ⅓ if we see $327+ Raise Stop-losses to Break-even
MCD — Ring ‘em up! Long from $291.50 & trimmed ⅓ at $292.50+. Down to ½ or less as MCD pressed $295 yesterday. I did not have the second levels in here, but a trim was warranted into that strength.
a. Break-even stop on remainder.
Go-To Watchlist
Feel free to build your own trades off these relative strength leaders
Relative strength leaders → Tech remains absolutely the strongest group lately.
MCD, PEP & KO, WMT, PG — XLP
LLY
NVDA, CRM
MSFT, AAPL, META
PANW, FTNT (10-week/50-day combo & prior breakout level)
ULTA & LULU
GE
FSLR
HCA
DKS
WYNN
MELI
Economic Calendar
