Downside Reversal - Sign of More Weakness to Come?

Hi everyone,

I hope you are having a great Wednesday!

In this post I’ll concisely share my thoughts on today’s action. And share a bunch of stock charts that caught my eye

Now let’s dive in ↓

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Market Action

The QQQ gapped up but sold off, closing at lows. We saw similar action from many stocks as there were a lot of failed pivot break outs.

A day like this is something to take note of. Watch to see is there is more follow on weakness or if we can regroup and form a range here.

The IWO also put in a negative bar closing at lows

Volume

Volume was higher on the NYSE and lower on the Nasdaq.

Trends ( Based on QQQ)

Shortest - 5 Day SMA - Down - Below declining

Short-term - 21 ema - Up - Above Rising

Intermediate term - 50 sma - Up - Above Rising

Longterm - 200 sma - Up - Above Rising

Group/Themes Action

The homebuilders and genomics themes stood out today but overall mostly poor closing ranges from my universe list.

Here’s a daily Group Performance chart (% From Open) from TraderLion:

Key Stocks in Deepvue

S acted well after earnings

NVDA downside reversal

IOT still holding up but not the best bar.

ESTC consolidation day

GTLB the market held this one back

PATH watch to see if it tightens and forms a U

DUOL downside reversal

TWST poking its head out

CRSP tried to push higher but faded

AMD large downside reversal

Market Thoughts

Today some definite weakness was present not just in the indexes but in individual names as well. Watching tomorrow to see if there is follow through down.

The current market cycle is 24 days long.

Reminder

Risk Management is Paramount

Refuse to enter randomly without managing risk and wait for the spots to develop, they will. Stocks during strong moves always pull back to the 21 ema, 50 sma multiple times.

Have patience, focus on the best stocks with the greatest potential. These will telegraph the rest of the market.

Take it day by day and manage risk along the way. Be ready for anything

What are your thoughts on today’s action? (Leave a comment below)

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Richard


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