The Sunday Scan
What's catching my eye ahead of the weekly session...
Let’s keep it simple.
After nine consecutive weeks of gains through April and May, the market decided June would be a month of consolidation. A little giving back. A little profit-taking. A healthy reminder that stocks don't move in a straight line forever.
Over the last fortnight, the 50dema was tested. And held.
The AVWAP from the Megagap of April 8 was tested. And held.
Gaps were filled. Narratives were challenged. Conviction was tested.
And for late buyers, pain was felt.
Yet despite all of that, last week’s close offers reason for optimism. Looking at SPY, price closed above both the 20-day EMA and the all-time high AVWAP.
What’s more, my Risk Composite Model re-entered the green zone, with the VIX falling back below the 50dema during Friday’s session.
Long story short, if SPY can continue to climb above 740 next week, my plan is simple: re-engage. Buy calls. Press the gas. And lean back into the same aggressive mindset that served so well throughout April and May.
Until price tells me otherwise, I see no reason to assume this is anything more sinister than a normal consolidation after an exceptional run.
SPY/QQQ
A hammer candle after buyers stepped in a the 50dema (red line) and Megagap™️ AVWAP (turquoise) - setting up a tasty looking reversal on the weekly. So long as buyers defend SPY 740 and QQQ 687, I’m in dip buying mode.
IGV
After playing the initial pop before watching late chasers get smoked over the last few weeks, there’s probably enough blood on the streets for me to get interested again as far as software is concerned - at least in the short term. Great RR with stops below the Q1 AWVAP (turquoise).
NOW above 101 is my pick of the bunch in this space. ORCL above 190 is a close second. TEAM above 88 not bad in third.
RGTI
RR is there on RGTI above the 50dema (red line) and prior low AVWAP (turquoise). Inverted head and shoulders pattern on the daily showing a neckline retest. Risky one - this one moves fast. But what’s life without a little spice?
ADEA
Not the cleanest breakout but a breakout nonetheless. Happy holding this position above the 50DEMA and adding calls above the prior low AVWAP (turquoise). Another risky one.
SOCL
Not the most liquid of ETFs, but SOCL held up well during the last couple of weeks, which means I’m interested - especially above the AVWAP from the Q1 lows. Key holdings include META, RDDT and SPOT. Watch the latter for a potential IHS breakout from a well defined bottoming formation.
NVDA
If we’re going higher, semis won’t be sitting on the sidelines. NVDA needs to reclaim the 50dema (red line) and AVWAP from the Q1 lows in the short term. Confidence grows above 207. A break below last week’s low spells trouble IMO. One to watch.
Long and Short of It
After two weeks of consolidation, multiple tests of support, and no shortage of bearish narratives, the bulls are still standing.
Could that change next week? Of course.
But until it does, I’m happy giving the benefit of the doubt to the trend that has been in place since April.
My risk models have done a great job of telling me when to push and when to tighten up over the last few months - and as long as we stay in the green zone, I’m not going to fade it.
As always, price gets the final say.
Let’s have a great week.
Best,
Al
Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser. All opinions are my own and reflect my personal interpretation of market conditions at the time of publication. Trading and investing involve risk, and you should always conduct your own research, consider your financial circumstances, and consult a qualified professional before making any investment decisions.