QQQs and Bitcoin in uptrend..
QQQ and Bitcoin in uptrend
SPY, IWM, DIA all in downtrend
UBS is buying Credit Suisse and all of the talk is about the banking sector. Among all of the ‘bank stress’ talk there are two segments of the market that are showing relative strength - Nasdaq and bitcoin.
Nasdaq is benefitting from two things: flight to safety and an expectation that the Fed will pause very soon. All of the cracks in the banking sector is proof that the rapid rise in rates is causing stress in the system and means that the Fed will be forced to pause rate hikes soon. I think most believe we still get a .25 pt hike this week but not much beyond that.. Rising rates have hurt tech stocks - especially growth stocks - the most and this will also be the group that benefits the most when the pause (and reversal?) happens. Bitcoin seems to be benefitting from the general idea that it is an alternative to traditional finance and maybe a hedge against hyper-inflation — could continue to benefit and is an uptrend to keep an eye on.
Price is king and, at the moment, the only major index that is in uptrend is the Nasdaq. In terms of strategy, allocating more exposure to tech stocks while the index is in uptrend is key to taking advantage of this trend. Hedge investments in the other indexes until they also get in a confirmed uptrend.
Let’s look at the markets
QQQ
Today will be day 3 of a confirmed uptrend (above 10d with positive MACD). I think if is very likely we trade sideways and possibly backtest the 10d as it rises, but I am not hedging investments in QQQ - it is showing relative strength and could certainly continue to break out. The weekly chart is also in uptrend and we also just had the highest weekly close since the first week of Feb. On the monthly, if we close here in this range it will be the highest monthly close since May ‘22..
Overall, very positive - let’s see the closing prices this week and adjust appropriately.
SPY
Downtrend. The SPY peeked above the 10d on Thursday but closed below on Friday. MACD is flattening and we are now off the recent lows from early last week - so things might be improving. Need to wait on closing price above the 10d and MACD confirmation - until then the SPY is still in downtrend.
If long the SPY I would consider selling weekly calls at the $400 level until we are in confirmed uptrend.
DIA
Confirmed downtrend. If long, consider selling calls against longs up around $325 if there is enough premium there.. Otherwise, we need to see it hold those lows from last week and get back above the 10d.. be patient..
IWM
Ugly chart — downtrend — Needs to hold the lows from December. Could definitely short below $170-ish if that is your thing or hope that it holds this area and we can get a bounce. Stay away from the Russell until it resolves itself. If long the Russell currently, I would sell calls against longs at $180 - maybe $175 if more conservative..
BITCOIN
Bitcoin (uptrend) is benefitting from the shockwaves in the banking sector and continues to show price strength. Currently at the hightest levels since June of last year - could see some resistance at $28,516 (weekly support/resistance from June) and consolidate a bit. Looks strong - if exposed to bitcoin and this broader sector just let it run and don’t call a top.
SMH
Day two of uptrend for the semiconductor index - resistance above at $255.64 and that is a spot to add if it trades above..
ARKK
Above the 10d, but MACD has not confirmed yet. It had it’s first close above the 10d on Thursday and then backtested the 10d on Friday. MACD is flat.. Above Thursday’s highs would be a spot to get long if not involved, but we really need to wait for a confirmed uptrend.
XLY
The XLY (consumer discretionary) is working on getting above the 10d. Really needs to get above Thursdays highs and above that downtrend line - but showing signs of life. Wait for this one to confirm before getting involved.. if long, let it ride until it closes below the 10d.
Financials, energy and industrials are all in downtrend..
