Yesterday we saw market futures hammered down, followed by a surprise 12 point gap down at the open, and weak hands shaken out below the 2428 level. I was expecting a pullback, but not the rug being pulled out, but after a closer examination of the charts, it becomes obvious that hand-full of tech stocks have been heavily shorted, on light summer volume, going into this (June) OPEX. They took out several stops, and that resulted in a panic, and I like to buy when stocks are oversold.
If you were watching my twitter in pre-market: you saw some troll, who probably works for one of these unscrupulous hedge funds; trying to convince me than support was breaking down, even though I had identified key support on the $SPX as 2418, a day earlier. Epic fail..!
There are a few lessons to be learned from yesterday's theatrics:
- Don't trust folks who tweet out emotional BS in my twitter feed
- Don't try to distract me from the trade, especially in the morning, or you will be added to my black list
- Only trust the charts.
This isn't the first time we've seen the hedgies try to throw me off the trade, and after blocking the latest fool... and confirming key support levels on several charts (including the Dow), we saw a 15 point rally off the lows. Winning!
This morning we see futures slightly higher, pressing up against resistance at the 2435 level, but I don't like the market here, and OPEX tends to be unpredictable, and pinned in a tight range. My advice it to sit on the sidelines, or take a 3 day weekend.
Yesterday I identified a contracting sideways triangle pattern on the chart, and that points to wave iv, as I had already suspected, and continued choppy trading, going into next week.
Not only are wave 4's hard to predict, so are pullbacks into wave "b". Not a good trading environment.
$SPX Wave C may have not even completed, and this could even turn into a down-turned triangle.
What ever has been beaten down the hardest is probably your best bet, and that's big tech.
CNBC reported this morning that tech was lower, but that's deceptive, and makes me wonder who's working behind the scenes, and loading the teleprompters.... The truth is, Tech has only pulled back after rallying off the lows, and that sets up for a continuing rally next week.
$NDX is sitting right on support in pink, at the bottom of the bullish channel in blue.
You may also find a trade in 3X miners NUGT
$GDX miners looks like it's trading into a complicated pattern, but if it breaks lower, cut your loses. This is one of the most volatile sectors of all, and the 3X leveraged funds are downright dangerous.
If you're interested in trading some other sector, I tweeted out practically everything on Thursday, including #Bitcoin Crushed as predicted. By far the best trade of the month, and possibly the year.
Odly enough, just after I tweeted out the above chart, that bitcoin index was driven up 9%, and that confirms in my mind that, I have a target on my head, but I would sell it again on this bounce. These hedge funds got nothing on me.
Take Care, and have a great weekend, AA
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