MARCH 30, 2021
STOCKS – LMND, DOCU, FUBO, MU
MACRO – SPY, DJT
- MIDDAY: The Trading Range For The S&P 500 Is Near Its End One-Way Or Another
- Options Trades Suggest Micron Plunges Following Results
- Morning Note: Gold Says No Inflation
- Midday- Defensives Lead S&P 500
- Morning Note: Margin Call, Gentlemen
- T.W.A – A Tale Of Two Markets
- PODCAST- WHY FRIDAY WAS LIKELY A MECHANICAL MOVE
- Midday – Waiting For TIPS To Break
- Morning Note: Another Volatile Day Lies Ahead
- MIDDAY: Sell-Off Not Over Yet
- Morning Note: On The Brink
Stocks finished mostly lower, with the S&P 500 down about 30 bps and the NASDAQ QQQ ETF down 50 bps. The charts all appear to be saying one thing at this point, and it’s that something is about dramatically change. Whether it is good or bad is hard to discern because the patterns point to lower prices, while the market momentum seems hard to go against. (Paid content – MIDDAY: The Trading Range For The S&P 500 Is Near Its End One-Way Or Another)
The March 2020 uptrend is being rechallenged, and unless the index breaks higher, it is at risk of moving through that trend line. This time the is risk is that the S&P 500 will fall below it permanently, signaling a change in trend, and potential direction.
This means I think the sideways range of 3960 on the futures is over.
There are not many clues out there to help, but the pattern is a rising wedge and that is normally bearish. Meanwhile, the RSI is trending lower and that too is bearish. So a change in direction from higher to lower would not be surprising.
Dow Jones Transports (DJT)
Meanwhile, the Dow Jones Transportation average is bumping up against resistance that dates back to June. The volume levels have been really bad, and the RSI has been going sideways. It would suggest that a pullback starts at this point.
We have been waiting a really long time for DocuSign to break, and that time may be now. There is a bearish descending triangle in the pattern, and a drop below $196, signals a further drop to $160.
The bearish bets keep piling on for Micron, with another one registering today. The stock will report tomorrow, and it is likely to come down to gross margins as it always does. The bearish options bets coupled with the weak price action suggest, disappointing gross margins tomorrow. We will see, but a drop to $74.20 does seem probable. (Paid content, first-two weeks are free to try – Options Trades Suggest Micron Plunges Following Results)
What’s happened to Fubo, I haven’t looked at this one for a while. Could it go even lower? The RSI says yes it can, that would take it all the way back to $15. (Should be free to read, written on December 22 – fuboTV’s Stock Is In The Middle Of A Giant Squeeze)
Lemonade is in the same boat, and the stocks giant run-up, like fubo, was all options induced gamma squeezing. That’s unfortunate, I tried to warn many of what was happening, and that these stocks were rising not because of their fundamentals, but because of how the mechanics of the market works. The declines have been brutal to witness. (Should be free to read from January 11- The Lemonade Squeeze Grows More Insane)
Anyway, we will save some other ones for another day this week.
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