Stocks Gap Lower and Stay Lower On April 19

April 19, 2021

STOCKS – NVDA, SQ, MU, IBM

MACRO – SPY

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Stocks fell some today; certainly nothing too dramatic. The S&P 500 finished the day lower by around 60 bps, while the Qs dropped by about 1%. The level of resistance on the S&P 500 around 4,185 managed to hold today. It was never even tested, with the index gapping lower to start the day. It leaves an open gap that needs to be filled. Ideally, this gap gets filled tomorrow. This would tell us a lot about which direction the market is going to move from here. If it doesn’t get filled, it doesn’t mean much at this point.

NASDAQ Comp.

The NASDAQ Composite did fill one gap today and found some decent support at 13,860. There is also a gap to fill at 14,050 too. There are plenty of gaps to fill at lower levels as well. At this point, there is a lower high on the RSI that was created today, which could be a significant signal. Again, tomorrow should give us a lot more insight into what happens next.

Volatility

The VVIX volatility index also continues to push higher.

Nvidia (NVDA)

Nvidia was down sharply today after the UK raised a national security concern to the company’s proposed acquisition of ARM. I figured at some point; this would come up. I wasn’t sure it would be the UK; I was thinking maybe China. But we will have to wait and see what the remedy is, as it throws the good news from last week into the back seat. I still think the stock heads lower back to $450.

 

Square (SQ)

Square fell hard today after Bitcoin’s big decline over the weekend. The 50-day moving average appears to be very important at the moment, and if it breaks, there will likely be a retest of support at $200.

Micron (MU)

Micron continues to meltdown. It, too, is testing support at the 50-day moving average. For now, if it holds and must continue to hold to avoid a further drop back to $85.50.

IBM (IBM)

IBM was moving up after hours following quarterly results that were better than expected. The big question is if the stock can hold the breakout at $136; if so, there is a good chance the stock climb back to $150.

See you tomorrow.

Mike

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