(Free) Mega-Cap Tech Tries to Save the Market...Again

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Our View

Yesterday we talked about the market clash between big-cap tech and worries over regional banks. With FRC on the brink, fears were renewed that the regional banking crisis is not over yet. It helped drive KRE to new 52-week lows in the process.

At the same time, mega-cap tech stocks have been driving the gains in the S&P 500. Almost 90% of this year’s gains were driven by just 7 stocks (AAPL, MSFT, AMZN, GOOGL, NVDA, TSLA and META).

Yesterday MSFT hit 52-week highs after its report, yet the S&P’s late-day selling pressure was correlated with a late-day fade in the KRE ETF. Meta jumped 12% in AH trading Wednesday, so the market will likely try to build off those numbers again tomorrow.

However, if MSFT couldn’t carry the load (with a $2.2 trillion market cap), will Meta be able to with a ~$540 billion market cap? Probably not without some cooperation from the banks.

Our Lean

As we near the end of April, my friend Rich Miller — AKA Handelstats — has some key data points…

MiM and Daily Recap

The ES traded down to 4089.25 on Globex, rallied up to 4116.25 with a total volume of 325,000 contracts and opened Wednesday's regular session at 4101.25. After the open, the ES traded 4104.25, sold off down to 4094.50 and then stayed in a 10-point range for the next 49 minutes until it broke down to 4081.50 at 10:26. From there, it rallied up to 4094.50 at 10:59 and then up to 4107 at 11:22. After some back-and-fill, the ES rallied up to another new high at 4109.75 at 12:26, sold off down to 4096.25, held at the 4099 level and then dropped down to 4069.50.

At 3:38, the early imbalance showed $12 million to buy, then swung to $350 million to sell. The ES traded 4071.25 as the 3:50 cash imbalance showed $1.1 billion to sell, traded down to 4068.75 — a new low for the day — then rallied up to 4080.75 at 3:58 and traded 4074.75 on the 4:00 cash close. After 4:00 the ES rallied on Meta’s results, settling at 4085.50 on the 5:00 futures close, down 17 points or 0.42% on the day.

In the end, there always has to be some type of short squeeze/buy program to force the weak shorts out. In terms of the ES's overall tone, it was weak. In terms of the ES's overall trade, volume was on the high side at 1.75 million contracts traded.

Technical Edge —

• NYSE Breadth: 28% Upside Volume

• Advance/Decline: 34% Advance

• VIX: ~$18

Trade update on Berkshire below, under “Open Positions.” Plus I have an interesting chart to show that combines two ETFs. It’s not a trade setup, but I use it for broader scope on the market.

S&P 500 — ES

The S&P broke its three-day low on Tuesday, bounced back to the “half-back” area — aka the 50% retracement — and faded again on Wednesday.

• Upside Levels: 4120-25, 4140, 4160

• Downside levels: 4060-65, 4025

SPY…

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.

1. AAPL — [premium only]

2. XLV —[premium only]

3. BRK.B — [premium only] 

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.

1. [premium only]

2. [premium only]

3. [premium only]

4. [premium only]

5. [premium only]

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!