Morning Note 8.08.24
Patience required for Bulls
Current Market Conditions:
How did the indices act yesterday?
We gapped up a lot and not only gave it all back, but closed down on the day.
Looks to me like it was a Bulltrap. There is no bid intraday, no volume into the green candles, this environment can produce big moves that get faded quickly: Chop Chop
What are the main trends right now?
We are in a Bear market until proven otherwise
The Rotation to Small Caps was a Trap
The Rotation from Growth to Value is intact still
Semis and Tech are getting sold aggressively
Bonds are now inversely correlated with equities
Whats the Current Risk Appetite in Markets?
→ Low, Breakouts are not holding up.
What is my positioning, based on what I know about the markets:
Still 100% in Cash. This might take weeks. I might at some point probe the waters intraday, but I think this choppy environment does not lend itself to breakout trades.
Daily Focus List
MELI, CWAN, PLTR, PSN, UPST, NET, ZETA, KWEB
(This list can be copied and pasted at once into a TradingView watchlist)
Setups In Scope:
Review of PLTR price action as a case study:
PLTR sold off massively on monday before market open, and then got bought up aggressively, on monday night great earnings came out and PLTR shot up after hours, negating the entire Gap down.
The next day it got sold into the open, came back, retested resistance and got sold again. Yesterday it gapped above resistance followed through in the first 2 hours, but then just turned around, got sold below resistance and cosed at lows for the day.
This is a pretty ugly picture for a stock, however it is still holding above 10EMA, it should find support here, but if it break 25.50 it will fill the gap and probably go for below mondays low.
Will not touch this stock right now.
Do you think we’ll see the market drop even further? Debating on buying into some stocks rn or waiting a bit longer.