3 Positive Signs about the Current Market

Market Action

QQQ – a bit of follow through today as we edged above the recent range. We remain below declining 10 and 21 emas

IWM – still in the range

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

SG and CAVA standing out today

Key Stocks in Deepvue

NVDA holding up, semis still building

PLTR new highs

DOCS highest volume in over a year

AXON tight end to the week post gap

KVYO ideally flags out

LLY Push through the 50 sma

FTNT flagging post gap. CYBR another name to watch

ONON strong push, earnings upcoming hence the Deepvue Flag

TSLA tight range here below the 200 sma, can it pop through?

META continued RS from the big cap, big base

Current RS List, let me know what I am missing:

ASTS CAVA CRS CYBR DOCS DUOL EXAS IOT LLY MELI NOW PLTR RKT SG TGTX TMDX TTD ZETA SN AXON FTNT ONON NVDA TSLA META UPST KVYO

Potential Leading themes

Biotech, Health Care, Fast Food, Software

3 Positive Signs about the current market

We are not out of the woods yet and are still below the MAs on the $QQQ, but there are 3 positive signs I am noticing.

1. Earnings Gaps that are holding

In just the past few days we have seen many strong gaps that have held up well. How earnings gaps are received is a great tell for the overall risk appetite. I’m watching these carefully (many are listed and shown above) to see if they can build and keep trending.

If we start to see undercuts and failures, that would suggest more time is needed

2. Higher low on the Indexes

With thursday’s positive expectation breaker we set a first potential higher low on the daily chart with wednesday’s low. That is a key level as well as of course the monday key low.

If we stay above these areas and build, we could set up a pop above the moving averages. Even better would be is if we can tighten here and let the moving averages settle and then gap above them.

3. Potential Leaders leading the index price cycle

As shown above, there are multiple potential leaders that are ahead of the indexes and either near new highs or reclaiming their MAs well before the indexes look ready.

By no means is there a ton of setups out there but we are starting to see some themes in software, fast food, etc that could help drive the next trend.

Keep watching for RS, stocks showing themselves through positive price and volume action. This is the best tell for the health of the market.

Constructive action to end the week although more work is still needed.