More Downside On the Way? The Market Sells Off

Market Action

QQQ – Gap up and then selloff and close near lows. Classic correction type day. We have been wedging up slightly here. The 200sma is a key level as well as the Monday low.

To bottom we need a slowing of downside momentum and the start of the formation of higher lows

IWM – similar type action after rejecting at the 50sma

Here are the two case studies of 2018 and 2020 that provide examples of what you can expect form a correction just in case you haven’t seen them yet.

I’ve been taking a look at recent sharp corrections. Here is the 2024 Correction so far compared to the 2020 Correction. Patience (while still prepping for the uptrend) until test/reclaim moving averages from below + form a higher low. If active, tight leashes on trades

QQQ 2024 versus 2020 Case Study – All corrections exhibit similar type action.

Here is the current 2024 Correction versus the 2018 Correction. Notice in that one there were similar points where it looked to be over, only for the rally to fail at key MAs. We’ll see how this current one ultimately resolves. The low could be in, one day at a time.

QQQ 2024 versus 2018 Case Study – Patience is required during corrections, taking it day by until the market proves itself.

Also key is how potential leaders are acting. As the correction ends they will be all setting up and breaking out through pivots.

Look for group action, big gap ups, volume surges, Higher lows as the market makes lower ones, reclaims of moving averages

Avoiding the chop and frustration is key during corrections. Experienced traders can look to pick spots, daytrade or see if levels holds during the day to hold through the close but less is more until the wind is back at our back.

With all that said you should be getting excited. We’ve had some great opportunities in 2023 and 2024 and this correction is setting up another one. The longer this goes on and the deeper the correction, the greater the potential for another uptrend that could change your year and life. You just have to do your homework and be ready mentally when that happens.

Trends (1/4 Up)

Shortest – 10 Day EMA – Down – Below Declining
Short-term – 21 ema – Down – Below Declining
Intermediate term – 50 sma – Down – Below Declining
Longterm – 200 sma – Up – Above Rising

Groups/Sectors % Change from Open

Performance Charts from Deepvue

Heatmap from Deepvue

Key Stocks in Deepvue

NVDA rejected at the 10ema

UPST was stock in play – 5min chart. AVWAP retake and trend above the 10ema

AXON also strong gapper

EXEL biotech with numbers strong gap. Moving up the right side of a base from 2017

TSLA rejected at the 200sma

PLTR downside reversal

MELI ignoring the market

Market Thoughts

The key low could be tested, we’ll see if we hold near that area and start to build out or see more acceleration to the downside.

On the flip side with closes near the low today we could have positive expectation breakers tomorrow

Volatility still high and less is more still until charts really shape up and we see higher lows forming

This is a great time ton study, work on your system, build a model book etc.