bulls driving higher on cruise control

$SPY 7 straight sessions of strong bull daily candle bars printed in the indices as unconvinced traders sit on the sidelines and non believing bears dig deeper in their short positions. We closed Friday about 1 $SPY point from all time highs as the bulls have basically had cruise control on the entire trip up here. Last week I wrote in my weekly recap bear bounce to sell or V shaped rally to buy I outlined some of the criteria I would be looking for this week to help decide which direction to lean. The 181 level I talked about was essentially the battleground I wanted to see resolved to help decide if this rally was for real, and hindsight shows us that the bulls had a clean victory. So what happens now? I wish I knew, so lets break down the action for clues. We are in an immediate term uptrend with a level of interest (expected resistance) 1 point above us coinciding with all time highs. We have short term support about two points below us at 182. One would expect this near term trend to continue to all time highs where the price action will once again need to be assessed. We need to plan out the scenarios, will we rocket by the old highs creating a mini buying panic to higher prices? Will we stall out and tread water for a little time? Or maybe a violent rejection back into the range? Time will tell, until then , trade your plan and don’t get caught flat footed. Being long is paying right now, being short is not, all we know for certain is the now.

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$AAPL shouldn’t be too surprising here, we talked about this name last week as it climbed higher in a well defined rising channel where more upside was talked about as being the path of least resistance. But now things are a little different. Similar to last week where I talked about the $SPY being at an interesting area of inflection I now believe Apple is in the same boat. I think the easy bull case money was just made. We basically filled the gap, and rallied right into previous supply. this 545 – 550 level is the big level to clear on a daily time frame. I think the SHORT side on a swing basis sets up a very attractive risk to reward ratio. Use this tight base to refine your entry point, a breakdown below 541 could be a nice entry with a stop above 546 or a close above 550 if you really want to give this some breathing room. If it continues next week breaking out higher out of this base and into the 550s then you know the market is shrugging off this resistance and you would just want to avoid the short trade. Disclaimer: I took a starter (1/2) short position in Apple on Friday around 544 in my swing account.

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$GOOG new all time highs in this monster, Google continues to work. Closing above 1200 and trading within an uptrend on every timeframe there is alot to like. Near term support around 1195 and only profits and air above.

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$NFLX here is a pattern I don’t see all that often, a broadening formation or megaphone pattern as Netflix trades near all time highs. It’s certainly not the cleanest and tight pattern that you may want to see at all time highs however technically if you are a bull in this name it’s not really doing anything wrong. I still remain constructive on the name, not very interested in it on a swing basis however this volatility does lend itself to some nice day trading opportunities.

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$FB look at this beauty. A convincing RIP to new all time highs and a nice tight high level base. I wish I were involved in this name from lower. Whats not to like? I will gravitate to this name on the long side next week so long as the market doesn’t completely rollover. All signs point higher.

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$AMZN remains in no mans land trading within a large 340 to 365 trading range after getting sold off on the back of their earnings report. With such a wide risk the volatility is naturally elevated and it does create some nice intraday trading opportunities but I really wouldn’t be doing a whole lot with the stock on a swing basis. To get bullish I would want to see this base fill out more before breaking above 365 and on the short side I would want to see the 340 lows taken out for continued momentum lower. Stick to day trading until something cleaner sets up.

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$TSLA feels like just yesterday we were trading in the lower 100s and now Tesla is making new all time highs and challenging the big psychological 200 price tag. We would expect to see some resistance around previous all time highs (195) and this big round number so a slight stall here isn’t unreasonable. It has had a tremendous run all stemming from the igniting bar in the lower 130s  so it will be interesting to see if this stock can continue on and get comfortable trading with a 200 handle. I certainly still like this name to the long side but I want to see how this level plays out before jumping in at these prices. It’s rarely a winning strategy to short stocks making all time highs.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 20+ years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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