Market thoughts:- Today was a material single day decline. The $S&P 500(.SPX)$ is below its short term trend. A checkmark on the risk-off criteria. - Despite the daily decline, breadth remained positive with more stocks making new highs than lows. - Overall 2/3 risk-off criteria are active. I will refrain from bearish thoughts until 3/3- The melt-up scenario is on pause with $ARK Innovation ETF(ARKK)$ < 45, my trade there has ended with a paper cut. Will reattempt on next close above 45. Will repeat until melt-up transpires or a bear market never enables price to trade above 45- $iShares Russell 2000 ETF(IWM)$ is still above 212, this is a bright spotFollow
The $S&P 500(.SPX)$ is up 19% year to date— $ARK Innovation ETF(ARKK)$ is down 7.5%. In the melt up scenario I think it very possible ARKK outperforms the index. I’m long ARKK— a decent chance Morningstar’s wealth destroyer commentary marked a bottom for the modern day risk on barometer. +2.4% to open the weekFollow me to learn more about analysis!!https://x.com/tomthetrader1/status/1812855310563897806
The small-cap trade is on— so long as $ARK Innovation ETF(ARKK)$ keeps above 45, and $iShares Russell 2000 ETF(IWM)$ above 212 I favour the melt-up narrative with outperformance in this category. Ending last week I am long ARKK. The $S&P 500(.SPX)$ is up almost 18% year to date and the Nasdaq 20%. In a melt up scenario ARKK trading 70-100 does not feel unreasonable. If a melt up does transpire— greed will blind participants as it always does. My plan is to enjoy the melt up trade through small cap participation, and conclude the trade when the short term trend, breadth and momentum (my “three correction criteria”) falter in the broader market.Follow me to lear
$ARK Innovation ETF(ARKK)$ thoughts: The modern day risk on barometer closed above subtly 45 to end last week, and is now above the 50-day moving average. If a character change is underway, this moving average has good record of offering price support.I plan to participate actively in ARKK as price consistently trades above 45. This is my favored 'melt-up' trade. Any closes below 45 terminate the trade attempt. Meaningful exposure to the idea will be marked with a breakout above 52. I expect the initial positioning to generate a few paper cuts before establishing full trade size.If price fails to sustain above 45 I will not be interested, and will monitor broader market risk signals (short term trend, breadth and momentum) that favor the odds of a
$S&P 500(.SPX)$ If a melt-up is underway, I believe small caps will outperform due to a mean reversion effect, like an elastic band. Cathie Wood's $ARK Innovation ETF(ARKK)$ has been named the 'wealth destroyer'The ETF has been consolidating sideways for nearly two years. While it may take some time for ARKK to break out, there are two key levels to watch for a change in character. The first is 45, which would move the price above the 50-day moving average, a level that has provided strong support. The second, more critical level is 52. Sustained prices above 52 would signal a visible breakout.For me, this ETF serves as a modern-day risk barometer.Follow me to learn more about analysis!!https://x.com/
$S&P 500(.SPX)$ thoughts: Week over week market breadth continues to get worse. Throughout all of last week, more stocks made new lows than new highs. I frequently post about breadth, however in my analysis there is three criteria that determine a risk-off environment. Breadth as a stand-alone measure is insufficient.1. Price below the short term trend2. Negative breadth, represented by Net New Highs across NYSE and Nasdaq markets (middle panel)3. Negative Momentum, using the Percentage Price Oscillator (lower panel)When all three trigger, the market shifts to a risk off environment making a decline the next most probable move. Ending last week (and the two weeks before) only 1 of 3 criteria remain active. Similar to the post at the beginning
Hello everyone！Today i want to share some technical analysis with you! $S&P 500(.SPX)$ thoughts & lesson: More stocks made new lows today versus new highs. Breadth stand-alone is a weak measure of market direction— however, when you pair that with key moving averages the data becomes a magnitude more useful. I know that at a point with negative breadth and the index closing below 5300 it becomes a scenario that heavily points towards a risk off environment. Then there is the backdrop that little good will come to equities following rate cuts— there is a good quote about history rhyming out there…. somehow I don’t feel this is a consensus thought. Being bullish into rate cuts I think will be like swimming against the current / overstaying y
$S&P 500(.SPX)$ thoughts: Three criteria set the stage in my analysis for determining the market environment as risk-on or risk-off. 1. Price relative to the short term trend (20-day exp) 2. Breath, represented by Net New Highs across NYSE & Nasdaq markets 3. Momentum using the Percentage Price Oscillator When price falls below the short term trend, breadth turns negative, and momentum slows the market conditions quickly shift to risk-ff, making a decline the next most probable market move. The most recent event was on April 10, a quick and moderate 4% decline followed. At the end of last week, one of three risk off criteria was active. Ending Thursday this was 2/3, however Friday's rally prevented a full set of risk-off signals to trigger
$S&P 500(.SPX)$ Price below short term trend ✅Upside momentum decelerating ✅ Breadth Negative ❎Despite a negative close on all three indices, more stocks made new highs than new lows. 2/3 criteria ending Thurs May 30If the S&P 500 remains below 5245 and breadth paces for a negative close I will position short into the weekend. Initial targets for this trade will be 5100 - 5000. Greater detail, context & charts issues for Sunday morning longer format post + letter.Follow me to learn more about analysis!!https://x.com/tomthetrader1
$S&P 500(.SPX)$ thoughts: Breath closed negative today— and small caps continue to distance themselves from breakout. Stand-alone this is insufficient, but it is a start. From here, this is not looking like a melt-up scenario. At this rate another risk-off scenario will transpire should breadth keep negative and the index close below 4245. In that scenario I will have no heartache returning with a bearish outlook and positioning.Follow me to learn more about analysis!!https://x.com/tomthetrader1