Outta The Way, Bears!!

Last updated on Apr 15, 2024

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GDP Anticipated, Partly Digested

by Alex King.

(Originally Posted Here.)

US equity indices ran up bigly in premarket and the early part of regular trading hours yesterday, in anticipation of and then in an initial reaction to US GDP numbers. The indices sold off towards the end of the trading day delivering what looked like a nothingburger for the S&P and Nasdaq. The Russell closed up some.

During the day high beta names remained elevated. This happens occasionally - scary stocks are bid up whilst the bigs sell off - and we can call that a mixed signal at best. It does not signal general bullishness to my eyes; for that you want to see high volume sustained buying in the major names.

After hours there were very positive earnings reactions to ho-hum numbers from software companies Salesforce ($CRM) and Snowflake ($SNOW). Both were up around +10% in the postmarket period. That does look like bullish sentiment, particularly for $CRM which is now something of a grandpa-tech name, becoming more akin to its alma mater Oracle as each year goes by. ($CRM is a Dow Jones 30 constituent).

And in the nearer term?

As I noted here on Tuesday, each of the indices are closing in on what looks to me to be local Wave 5 termination zones. So speaking personally I am preparing to hedge the long positions; carefully, because there is a chance that the ceaseless grind upwards continues. As always, paying Inner Circle subscribers will get Trade Disclosure Alerts on a real-time basis before any such short positions are entered into.

Let's Get To Work

Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.

US 10-Year Yield

S&P500 / SPY / ES / UPRO

Larger Degree - BASE CASE

Note the current price is right at the top of the last high volume node. Above this price there is hardly any unsold inventory. Which may mean the path to all time highs becomes easier if SPY >460ish.

Smaller Degree

3x Levered Long ETF - UPRO

No change. $50-65 looks like the region to watch from the perspective of adding hedges or selling long UPRO positions. Currently $48.

Personal Trading Plan Disclosure: I currently hold UPRO long and unhedged. I am considering hedging with SPXU if and when UPRO gets to that W5 termination zone highlighted above.

Nasdaq-100 / QQQ / NQ / TQQQ

No change to our larger-degree outlook. It will soon be time to test whether our base case is valid or too cautious.

Base Case - Larger degree:

Bull Case - Larger Degree:

Smaller Degree:

3x Levered Long ETF - TQQQ

No change. $49-55 looks like the region to watch from the perspective of adding hedges or selling long TQQQ positions. Currently $44.

Personal Trading Plan Disclosure: I hold TQQQ long and unhedged at present. I am considering hedging using SQQQ if and when TQQQ reaches the Wave 5 Termination zone highlighted above.