Market Milestones: Knock Knock

[Image] Good morning , Knock knock. Who’s there? Luke. Luke Who? Luke out! Here come the bulls! [Image] We wanted a bullish pop and we planned for this exact bounce, but the question now is: at what point does a bounce or a pop become an explosion? I would say sometime around this past Tuesday when the SPY hit a 10% gain in 12 days. Our red bars are tracking the 2022 October low and that move from low to high was about 11%. After the initial 11% run, it pulled back 5% and then pushed another 11%. It looks like that scenario could very well be playing out yet again. With the herculean strength of this initial move on SPY and QQQ, it is very likely that dips are bought up quickly and price is pushed to new highs. Another pattern that SPY may be replicating is the bullish run from May 4th through July 27th of this year. It ran 8% in 17 days, had a shallow little dipperoo and then pushed another 6.5% before topping out. When we overlay the bars pattern, it will take us right into the end of this year before another top comes in. The blue bars are back baby! We've extensively discussed the fact that big tech is propping the markets up and the possibility of the biggest and techiest of the bunch making a robust push into year-end, and now we're seeing it unfold. SPY [Image]( The QQQ has maintained its leadership throughout the year, with powerhouse names like MSFT, AAPL, NVDA, and META blazing the trail and the competition. I heard through the grapevine that the QQQ has been hanging around with Lance Armstrong’s doctor on weekends. The weakness of the rest of the market is even more glaring with the doped up QQQ powering higher with thighs the size of tree trunks. QQQ [Image]( The IWM, RSP, ARKK, XLB, XLP, XLV, and XLF all have strong topping patterns in place. Essentially anything that is not big tech or AI adjacent is struggling. When we look specifically at the IWM and RSP we can see that the large head and shoulders set ups are still very much in play. While this bounce could carry us into the end of the year, if big tech stumbles while these topping patterns are still intact, that could be a serious warning of sell offs to come. RSP [Image]( IWM [Image]( [Image] As you may have heard Michael Burry, who was played by Batman in the big short, has exited his large and public bearish bet against the SPY and QQQ. It’s hard to know for sure but rumors on X say he took a 40% hair cut on that position. His next big short is apparently on iShares Semiconductor ETF (SOXX). Batman was probably reading the Market Milestone on August 17th when we sent out [this chart]( for our ETF of the week. [Here is the updated chart]( showing it slaying Target 1 and narrowly missing Target 2. SOXX is moving essentially identically to the SPY. Imagine that! It’s almost like the markets are driven entirely by just a few high flying tech names. The top three holdings, AMD, NVDA, AVGO make up 25% of the total weighting. AVGO has been on an absolute rampage moving 75% in 2023, most of that move coming in the last 6 months. NVDA moved an incredible 253% this year, of which The Traders Plan captured 100%. AMD moved 120% from January to June and has been consolidating ever since. It looks to be in the best position to make a strong move higher into the end of the year. All of these stats say that these names are extended. However, just because something is extended does not mean it is a sure thing to short, especially with puts. The timing with long options needs to be on point. Even though I am on record saying that NVDA will fill its earnings gap at $300 and likely go even lower possibly filling the $211 gap, that does not mean it has to do it soon. It could take a year, or it could start 4 days from now on NVDA’s earnings. Long term, I like all three of those names, and at the same time I think they all pullback considerably in the next year or so. SOXX has moved 19% in 13 days and is extremely extended. For a short-term trade, the risk reward is more favorable for a short. However, with NVDA earnings around the corner and AVGO earnings just after that, it is going to be a coin flip for a few more weeks. Best of luck Batman don’t get your back broken out there. SOXX [Image]( If you made it this far, I appreciate it. [Let me know your thoughts](mailto:support@thetradersplan.com). Are there any charts you want to see in the next Market Milestone? Strive On, Yates Craig, RLT & TPN Market Analyst Disclosure: You are responsible for your own trading decisions. ALWAYS, do your own research before investing in any of the above securities. This is not a solicitation to buy/sell ETFs or securities. NEVER invest money in ETFs or stocks that you can't afford to lose. You can lose all of your capital by trading any securities mentioned. These ETFs/securities are very volatile and gain and lose value quickly. We reserve the right to freely trade in any mentioned ETFs or securities. We are not compensated by any mentioned companies. We trade ETFs and securities based on our opinion of intrinsic/possible future value only. We are not registered investment advisors, so always do your own research before buying any securities. Unable to view? Read it [online]( If you no longer wish to receive mail from us, you can [unsubscribe]( Sent from: Real Life Trading in Nashville TN 37221