The Market Sells Off on Fed Cut – The Start of a Correction?
Richard Moglen
Stock Trader & Student of the Markets. I help traders improve their systems & performance at TraderLion & Deepvue
December 18, 2024
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Market Action
QQQ – Large distribution day down 3% after Fed Cuts rates. below the 21ema now. Maybe the declining breadth was a tell that we were vulnerable. This is a significant day to take note of. These type of bars, if not resolved quickly, can signal the start of corrections & basing periods.
This too me would actually be a great thing, it would set up new bases as leaders have been running for some time
Short Term Expectation based on the close is consolidation or lower. Likely we get some bounce attempt
Bulls want to see us bounce, build, and rally
Bears want to see us have a failed rally, then more rollover
IWM – even weaker, well below the 50sma
Bulls would want to see us maybe exhaust at the 200day and then start a new cycle
Bears want to see us break lower or similar failed rally and rollover
IBIT- had an island top look to it. Negative bar but holding up better than most.
Bulls want to see us build sideways and respect the 21ema
Bears want to see us follow through lower below the 21ema
Trends (2/4 Up)
Shortest – 10 Day EMA – Down Below Declining
Short-term – 21 ema – Down Below Declining
Intermediate term – 50 sma -Up Above Rising
Longterm – 200 sma – Up – Above Rising
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Groups/Sectors
Performance Today on the Left, Performance over the past 20 days on the right.
Performance Charts from Deepvue
Deepvue Leaders Heatmap
S&P 500
Group Ranks: 1 Day, 1 Week, 1 Month, 3 Month from left to right. This is now a preset for Deepvue Members
Post Market Movers. Mostly speculative names
Key Stocks and Moves in Deepvue
NVDA gap up but downside reversal, rejected near the 21ema
TSLA wide range day and sharp pullback, want to see it respect the ATHs and build
META break lower from the flag
AMZN break lower, testing the 21ema
GOOG follow through down
COIN broke below the range and 21ema. MSTR similar
ALAB pullback, testing the 10ema area which has been a guardrail for this trend
RDDT breaking below the 10ema
PLTR tried to push then downside reversal
QMCO standout from DV leaders. Huge follow through today on this speculative name.
Stocks Setting Up / RS
Focusing more on watching the leaders and watching for relative strength versus looking for tight setups with a market like today.
Focusing on names holding near the 10ema. I will be tracking a list of stocks showing RS each day.
Important!
Just because a stock is holding up well today does not mean it can get taken to the cleaners tomorrow. What we are looking for is sustained RS throughout the market pullback
NVCR holding the 10ema, did fade hard
DOCS downside reversal but still holding near the MAs and range lows
AVGO will be watching for a range to form.
RBRK will be watching for a test of the 21ema
ASAN will be watching to see how it holds up and for a tight range to form, like the weekly
ALAB will be watching to see if ti forms another spot
RBLX holding near the 10ema
APP see if it can reclaim the range
RDDT will be watching closely
Themes and Leaders
Key Themes
Software, AI
These names have the top RS, growth stories
TSLA PLTR RDDT ALAB APP
Market Thoughts & Focus
How we close this week will be very key.
Do we have a positive expectation breaker tomorrow and build a range, do we have a few days of rally and then reconfirm down?
I’ll be tracking the leaders and the market closely and looking for signs of RS. The Fed is the news catalyst that matters right now.
Don’t mess up a great year trying to force setups if the market stays volatile, stay nimble, vigilant, and ready mentally for when the market and stocks set up.
If we do enter a correction, it will set up some great moves.
Anything can happen, Day by Day – Managing risk along the way