After a small dip last week, we’re back at 2800.
This has the look and feel of price acceptance. When prices are accepted during an uptrend, there is a tendency for the market to continue in its uptrend.
I don’t think it will be the same rate of change that we experienced earlier this year, and that has been my thesis for about a full month now. I also don’t think we’ll see any kind of nasty selling like we did last quarter.
I’ve talked about this multiple times. Inventory was cleared out in December as investors blew out of their positions. You now have a market where there is plenty of cash on the sidelines, and not much inventory left to sell.
It’s supply and demand. There’s not much supply, and plenty of demand, so prices auction higher until you get enough investors holding inventory that they create more supply and prices head lower.
We’re not seeing that.
I think the next few weeks will play out one of two ways. Either we grind higher as the market attempts to test the all time high level, or we see a stealth correction where money rotates in and out of different sectors. I’d prefer the second option.
Trade #1: NVDA
This is the last of the tech wreck to break out of its bottoming pattern. You can establish some long exposure if you run a stop under the most recent swing lows.
Trade Setup
Expected Price: 168.60
Sell to Open NVDA Apr 150/145 put Spread
Tier 1: Enter at 0.67, Exit at 0.17
Tier 2: Enter at 0.97, Exit at 0.37
Tier 3: Enter at 1.27, Exit at 0.57
Stop Loss Level: A close under 144.80
Trade #2: NKE
I want to see a retest of the rising 50 day moving average.
Trade Setup
Expected Price: 82
Sell to Open NKE May 75/70 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.20, Exit at 0.70