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Potential Fry-Day on Tap as Banks Report Earnings
S&P rips higher on Thursday.
Danny Riley
April 14, 2023
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Three quick notes. For those that were not able to attend yesterday’s Floor Trader Spaces, the recording can be found here.
Second, we have a guest post from my friend Cary of Artec Advisory just below the technical charts. Please check it out if you have a few minutes this morning.
Third, Friday is always a free version for the entire Opening Print. If you think this type of game plan would help you, consider signing up for a free 7-day trial. HAGW
Our View
In yesterday’s Our Lean section, I mentioned the PitBull’s rule for the Thursday/Friday low the week before the April expiration and lo and behold, it was the low! The ES opened around 4130, coughed up ~5 points and ripped higher by 50 handles.
Did the public get skunked into getting short in front of all the US bank earnings? Most of the time the public gets sucked into believing what they read or hear on CNBC and the market does the exact opposite. As I said on the Twitter Spaces, I don't watch the news. I get it in my newsfeed from LiveSquawk on the MrTopStep chat and news apps on my iPhone. I mostly like the fact that it’s opinion-less.
Lately, I have tried to explain that the 'bots' know when the crowd gets offside. You can't sell after the ES falls and you can't buy it after it goes up. In order to play this, you have to trade the range — AKA buy the drops and sell the pops.
Our Lean
Because of the Spaces interview, I didn't get in the room until 10:00 a.m yesterday, so I missed the first half hour. I didn't catch the long and I canceled my 4152.50 offer to go short.
It was just too thin volume-wise and the tech index buy programs were nonstop. It seems to be the environment we are stuck in right now. The question today is can the ES keep going up?
From here, we need to see if we can clear the 4175 level. That could put 4200 and 4217-25 in play. On the downside, watch 4142.50 — which took forever to clear — to see if this level is support. Below that is 4115, then the key 4098 to 4104 zone.
MiM and Daily Recap
The ES rallied up to 4137.75 on Globex and opened Thursday's regular session at 4129.75. After the open, the ES hugged the VWAP in a tight range until a small buy program hit the NQ, pushing the ES up into the buy stops and sending it up to 4147 at 10:32. The ES continued to rally, making a series of 7 higher highs up to 4176.75, up 1.12% on the day, and the NQ up 1.43%.
After a small drop down to 4170.50, the ES made a new high at 4177 at 3:47 before the 3:50 cash imbalance showed $304 million to sell and traded 4172.25 on the 4:00 cash close. After 4:00, the ES traded in a 3-point range and settled at 4169 on the 5:00 futures close, up 50 points or +1.21% on the day.
In the end. In terms of the ES’s overall tone, it was like night and day; on Wednesday the NQ dragged the ES down and yesterday when the NQ reversed higher, the ES went straight up. In terms of the ES’s overall trade, volume was on the low side but steady at 1.38 million contracts traded.
MIM has been for sale all week.
Technical Edge —
NYSE Breadth: 72% Upside Volume
Advance/Decline: 71% Advance
VIX: ~$17.75
Something stood out to me Wednesday, which is how well the VIX held up (basically flat) while the S&P gave us that nasty bearish reversal. That’s not the only thing that set the stage for Thursday’s rally, but it was a small clue.
There’s something else I want to point out, which is how well defensive stocks are performing right now. Names like KO, PEP, PG, MCD, JNJ, the XLP and others are trending higher, riding multi-week winning streaks and in some cases, hitting all-time highs. So that’s some interesting action to note.
S&P 500 — ES
Impressive rally by the ES yesterday, but guess where it ran out of steam? Yep, the same spot it topped out last week and right near yesterday’s high (the 4170s). Bank earnings on tap, but did Thursday’s action set up more upside for Fry-day? Feels that way.
ES Daily
Upside Levels: 4172-78, 4200, 4217-25
Downside levels: 4142.50 (March high), 4115, 4095-4100, 4073-76
SPY
Look at the way that 10-day ema held, even though we didn’t get a complete tag of it. And the way the S&P ignored Wednesday’s red bar? Very impressive as well.
At this juncture, it simply looks like a bull consolidation pattern to short-term moving average support and now a rotation/continuation to the upside.
SPY Daily
Upside Levels: $415 to $416, $418, $421
Downside Levels: $412, $409.70-ish, 10-day ema, $405.50 to $406
SPX
4150 held almost to the tick on Thursday.
Upside Levels: 4150, 4172-75, 4195-4200
Downside Levels: 4133, 10-ema, 4070-75
QQQ
QQQ Daily
The QQQ cleared 5 days worth of highs on Thursday and closed near session highs. A daily-up rotation over $319.65 could open the door back up to the March/Q1 high of $321+
On the downside, the “want to hold” level is the 10-day ema and VWAP measure from the ATH. The “need to hold” level is ~$313.50.
TLT
TLT Daily
The TLT has a two-day low of $105.88 and had a heavy close Thursday. A daily-down rotation below $105.88 could open the door down to $104, then potentially put the 61.8% retrace and gap-fill in play between $102.50 and $102.75.
Stop-loss could be $107 to $107.50-ish (more aggressive traders would skew toward the latter).
Guest Post
Give the above video a watch, as Cary from Artec Advisory’s talks about the USD. You can find out more about him, 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.
FSLR, NVDA, QQQ, AAPL, down to runners. Congrats, all. Great sequence!
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.
Going for $168.50 to $170 on the next tranche. Raise stops up to $160.
GE — So tight! — long from ~$94.50. Stop-loss at 30 or 60 minute close below $93 (or $93.50 if you are playing this tight vs. last week’s low).
Upside target is $96+ for ⅓ trim. Then $97+
If not long, can get long on a rotation over $94.75-$95.
LMT — Wavered early, but bounced hard and gave bulls a low to measure against. Long from $485 — Here’s the chart.
Trimmed ⅓ in planned zone of $490 to $492. Next target, down to ½ or ⅓ at $495+
Stop can either B/E or just below $485g
** MCD — Keep an eye on a reset trade in this one. ATH after ATH. Looking for 10-day ema test.
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.
NVDA, AMD
TSCO
MSFT, AAPL, META
PANW, FTNT
FSLR
MCD
WMT — daily-up over $150 could get $151+ and extension to new high recent highs
PEP & KO → great reset trades to the 10-ema
AQUA
GE
DKS, ULTA
LMT, RTX
GOOGL, AVGO
ULTA & LULU
MELI
Economic Calendar
