To The Moon

Yesterday, I shared the $E-mini Nasdaq 100 - main 2612(NQmain)$ chart highlighting major technical cracks across the tape.

The sharp bearish reaction to Amazon’s earnings reinforced a high probability of holding Thursday night’s breakdown formation at the very least. Today’s selloff comes as no surprise: while the flush could have extended into next week, the directional bias was south following last night’s close.

The broader short setup began taking shape on Tuesday after indecisive price action printed a series of lower highs that again, I posted in my daily note. While Wednesday traded relatively neutral, corporate earnings served as the downside catalyst after the bell, just as noted on Tuesday when highlighted that rate hike probabilities were below 10%.

Framing the Tape: Weekly Levels Review

Every Friday, I model quantitative support and resistance levels for the trading week ahead across our core watchlist of mega-caps and high-liquidity assets. Once again, these levels were key this week for the setups with higher probabilities:

• $Microsoft(MSFT)$ : Declined directly into our 514.5 target for a -1.8% move, the loss of the CWL today triggered the setup since the week started in bullish mode.

• $Exxon Mobil(XOM)$ : Hit our high-probability 186.4 target for a +1.8% gain, with that level now flipping to active support.

• $S&P 500(.SPX)$ : Projected target at 7,567 was met, followed by a flush to 7,510 for a -1.5% move.

• $Broadcom(AVGO)$ : Staged a textbook reversal toward 335.1, reaching our extended target of 348 smoothly on Wednesday for an +8.0% weekly gain.

• $Wal-Mart(WMT)$ : Reached our projected 122 target (+2.3%), flipped the level into support, and pushed toward 125, another level modeled.

MSFT and SPX bounced today from or very close to the levels mentioned (514.9 and 7,510 respectively), a prove that institutional algorithms react to these levels.

Remember: more than 70% of the daily volume is driven by institutional algorithms in the NYSE. Since systematic algorithms dominate order flow, price action reacts around these specific technical levels.

Managing Risk with the Central Weekly Level (CWL)

My support and resistance framework relies on the Central Weekly Level (CWL) as the primary directional filter: holding above validates a bullish bias, while trading below confirms bearish control.

Beyond directional bias, the CWL provides an objective stop-loss anchor to manage risk in volatile conditions, and I have to say, this was not an easy week after the volatility spike on Wednesday after the bell. Consider two live examples from this week:

• $Palantir Technologies Inc.(PLTR)$ : Charts favored a bullish continuation, but the stock slid -6.4%. Because our CWL was set at 195.2, subscribers had an objective exit that capped the loss around -0.8% (I always suggest to set some space from the level).

• $Eli Lilly(LLY)$ : Based on overbought conditions outlined last Saturday, I anticipated a pullback. However, a blowout earnings report sent the stock surging +11.3%. Our risk parameter at 1,277 (just 0.4% above the prior Friday’s close) kept downside exposure strictly contained.

In both instances, adhering to the CWL limited downside to -0.8%, while our winning setups captured gains ranging from +1.8% to over +8.0% (average 3.5%). This is how quantitative levels keep your risk-reward strictly asymmetric.

Markets are always moving - and sometimes, the best move is knowing what works for you.

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