Daily Plan 12.1.23
Market Sending Mixed Signals
Welcome back everyone!
Today's trading session was quite eventful, with both bulls and bears facing significant pressure. The day began with rapid selling in both the E-mini and Nasdaq markets. However, the E-mini experienced limited downside throughout the session. In contrast, the Nasdaq witnessed a forceful recovery, gaining over +170 handles from its low, setting the low of the day (LOD) just below my target. Turning our attention to the Dow, it continued its rally, which I have been predicting for nearly two weeks now. This rally included an intense spike, squeezing any short sellers who were anticipating a downturn at this point. The question arises: how did I know the Dow was exhibiting strength, outperforming both the E-mini and Nasdaq?
The answer is simple.
I hope you have been paying close attention to the Commitments of Traders (COT) reports that I have been analyzing. These reports indicated that positioning was hinting at a potential rally. Large and Small Speculators were heavily short, while Commercials were extremely long. This positioning was the precise reason I predicted the rally in the 5-Year T-Note, Japanese Yen, Canadian Dollar, and Swiss Franc. Each of these predictions was made near their respective lows before they experienced sharp upward movements. The risk-reward ratio has been unparalleled, with nearly all of them reaching the 4:1R threshold. Risking 1% of an account could have netted over 20% in just three weeks, outpacing the S&P 500 in almost every year! However, I must emphasize that such a winning streak is not as common as one might think, and it's unlikely to continue throughout the year. But this is the time when astute traders can make substantial profits. To put things into perspective, even if the next 20 trades are losers, your account would still not be in the negative.
Adding to this, today also saw the Cybertruck event, which further fueled our short swing position. After the event, Tesla's stock declined by another 5 handles. The event unfolded as expected, with no groundbreaking news. However, what caught people's attention was the vehicle's range, which was lower than anticipated, and the pricing, which was higher than the figures quoted back in 2019. We must remember that this was all before COVID-19 and the subsequent influx of money into the economy. In my opinion, the price hikes are completely justified. I had expected the base model to be priced around $80,000, with the 'Cyberbeast' model around $120,000. Therefore, I am actually surprised by how affordable these trucks are. Regardless of whether you love, hate, or are indifferent to the truck, there is no denying that there will be significant demand for it. Currently, only the mid and high-tier models are available for reservation, which should generate additional revenue for the company as consumers are eager to get their hands on the trucks as soon as possible. As more numbers are released, I plan to cover them in depth and discuss what they could mean for the company's future.
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It's time to wrap up this week with a bang and share my thoughts for tomorrow.
Let’s dive in!