Market Thoughts: Bulls Have Reason To Run

Market is HAPPY!

In pre-market I read how China had done another rate cut – a more aggressive one – which helped $SSEC rally over 2% and helped Japan reverse a -4% loss into only -1.5% after returning from the holidays post AAPL news and USDJPY flash crash. US Futures were firm last night despite Japan coming online/down 4% so in the morning when I saw the China rate cut, I tweeted this was bullish. I have also held that we still have the proverbial Santa Rally at our backs in full effect from Wednesday Dec 26th through today, so the China news would surely help the bulls.

As a result/coincidentally, Oil was popping – and front running a potential inventory report for today – and the Jobs report was a blockbuster.

Markets were up but not raging. That is not what awakened the Bull…

Then at 10:30AM I tweeted the Bull was going to run thanks to Powell:

Powell was ‘expected’ to deliver relief – at least that is what the market was pricing in with no 2019 rate hikes – but it was his accommodative language that gave the market the hope the Fed would be at least flexible to pause hikes and/or slow its balance sheet rebalancing. (Remember his Dec 19th press conference when Powell said they would not slow the rebalancing path…)

I personally think the market is wrong in expecting the Fed to divert from either – rates or rebalancing – but a dovish-sounding Fed (today) is undoing the hawkish-sounding Fed (Dec 19th) and with that we likely climb back to those pre-Christmas levels: ~$2530-2547-2571-2597 in $SPX.

And maybe within the next week! Before the China Trade Talks ‘step into it’ and Earnings season kicks off – both of which will likely remind market participants of some very bad data points that have been temporarily forgotten: Huge Miss in ISM and a Huge Disappointment in $AAPLs pre-announcement!!

With that, my bias remains: long the Santa rally/January Effect – at least until Earnings Season.

Thursday looks very different to Friday…

Market Timing Calls

We will have some huge intraday moves across all asset classes and best way to catch them is in my Live Trading Room!!

• BABA to move down $5 ($135 stop, 130PT) – HIT
• BA likely down $10 ($319 to 309) – HIT
• AMD at -2% said looks like -10% day – HIT
• GILD spotted unusual call activity Wed that proved prescient as it gapped and ran 5% Thurs in a very down tape – HIT
• GS suggested this Friday’s $172.50C for $2.15 – went to $5.30 this morning – HIT

• SPX at $2500 would likely take out $2520 into $2530/40 – HIT
• AMD would likely run + have a 10% up day – HIT
• SPOT w $7M in premium for Apr $120C was to be chased up 10%
• AMZN AT $1540 said $1568PT today on way to $1617 next
• BABA was clean gap up above $132.54 trendline to chase (tagged $140) – HIT
• SQ upgraded PM meant it would get chased aggressively (up 13%) – HIT
• IQ out of the gate w UOA would run (up 10% like BOX Wed) – HIT
• CARA still working from $14 Wed to $15.89 PT now $15.25
• AAPL on its way to $135 in time but AFTER a bounce to $149.16, if above then $152 to gap fill $154.23

Pop into the trading room any time and make sure to ping me in chat if you if you have any questions or would like me to size up a chart you are spying 🙂

Coming Up!

Starting next week there will be ‘closed captioning’ in the trading room – thanks Karen – so these types of market thoughts/trade set ups/ideas will be displayed for attendees.

And as early as Monday (fingers crossed), the Live Portfolios will be linked to real-time market data and auto-triggering trade alerts to members, but first Zeke has to finish working on it/testing it as we have some issues with partials. So I apologize for the absence of Trade Alerts past few days while he works out some kinks and I got my sea legs back under me from being away on vacation. I also eagerly await Archna’s return from vaca for assistance with Chases!!

Possible Roadmap

This is in essence what I suspect could happen next few weeks/months before the next swoon. Let me be clear: the floor could give out ANYTIME but assuming bulls maintain the momentum, here is a possible scenario I can envision: H/T client Jenn for supplying the base chart of SPX with channel work so I could draw in my arrows:

Big Picture I still see ‘Flash Crash’ Potential

I prefer charting the NYSE composit over SPX as NYSE comprises 1500 stocks versus 500 for the S&P. As I talk about HERE, I see potential to crash at some point this year and potentially we kick it off end of Q1. To summarize:

Dec 13, 2018: I am projecting we pull down into that trendline support below the 100W EMA (white box and arrow) then bounce back into a 50/100W crossover before potentially and violently crashing lower in Q1 of the New Year.

And here we are today: We have broken the dashed trendline (see first yellow arrow) and now are bouncing right off the white-dotted MACD support line (bottom panel). Market likely bounces bounces now and then let’s see if bears re-appear at higher levels to take it lower into my $2277 – $2135 SPX targets.

Hope it helps!

Samantha

Thanks for reading and please consider joining me in the LIVE Trading Room where we work through Value and Momentum trade ideas and set ups every trading day.

At LaDucTrading, Samantha LaDuc leads the analysis, education and trading services. She analyzes price patterns and inter-market relationships across stocks, commodities, currencies and interest rates; develops macro investment themes to identify tactical trading opportunities; and employs strategic technical analysis to deliver high conviction stock, sector and market calls. Through LIVE portfolio-tracking, across multiple time-frames, we offer real-time Trade Alerts via SMS/email that frame the Thesis, Triggers, Time Frames, Trade Set-ups and Option Tactics. Samantha excels in chart pattern recognition, volatility insight with some big-picture macro perspective thrown in.

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