Welcome back, everyone. I hope you all had a great session yesterday.
There is quite a bit to unpack, as our levels worked out phenomenally well along with the performance of the majority of stocks posted in the watchlist. First, we will cover the levels on the S&P and then move on to the stocks. Based on the structure of the S&P, we drew a clear area where both longs and shorts could work. Heading into the session, we saw overnight selling to start the week. With price far below the 6932 point of control (POC), we had a lot of work to do to regain any bullish momentum for the cash session.
This POC was the pivot for the session, as buyers are in control above it and sellers are in control below. Because this price level has the most volume traded, overall positioning remains neutral there. Upon a move above it, buyers take control, attempting to liquidate shorts for a move back up to the value area high (VAH).
This was exactly what happened; price opened above the POC, which fueled a strong rally all day. The target was placed at the 6968 VAH, which was achieved within seven minutes of the opening bell. Furthermore, as we noted yesterday, 7020 has present sellers, which nearly marked the high of the day.
Each and every day, we break down the market structure on the S&P, which is providing pure alpha. Option contracts, whether SPX or SPY, saw returns of over 300% if bought at the open. Futures contracts on the ES would be up $1,250 per contract if held just to the 6968 target; if you held all the way to the high, you would be sitting at $3,700.
One of the strategies highlighted in the Mastering Volume Profile educational post was exactly what called the rally yesterday. It is very likely to continue working every day as this rally begins to ramp up.
Overall, this was a stunning way to start the week. Let’s now shift our focus to the stocks.
Stock Watchlist Updates
GameStop (GME): Breaking out; the stock is up to 26 after we gave this out at 21. LEAP 30 Strike Calls are already up 100%.
Immunome (IMNM): Bouncing back to highs, up 63% on commons since we posted it back in November.
Palantir (PLTR): Strong earnings with price right back up near the pennant low. A daily close back inside the pennant will trigger another long setup. Update on this could come as soon as tomorrow.
Abbott Laboratories (ABT): A strong bounce so far after we sent this out at 107. There is plenty of upside potential in the coming months.
Netflix (NFLX): Breaking below key support at 83, where we originally looked for longs. I no longer like this setup for longs and will walk away with a very minimal loss.
PACCAR (PCAR): Nearly broke to a new high and has gone vertical since we called for longs. There is no sign of this rally stopping anytime soon.
Riot Platforms (RIOT): Seeing strong selling while Bitcoin has been taken out for a beating. It is not ideal to see this come down to the mid-15s. We need Bitcoin to rebound sharply for this stock to really take off. I will be paying close attention to this.
Microsoft (MSFT): On the brink of hitting a fresh low after we called for shorts near 500. Support comes in just above 400, which is where I will send an update for a reversal. As of right now we are sitting on 70% on LEAP 450 Puts. More than likely will book these tomorrow if we hit a new low on the week.
Rocket Lab (RKLB): I banged the drum on a high being put in at 98. The stock has continued lower nearly every session, with price all the way down to 75 now. LEAP 80 Puts are currently up 34% with plenty of room until target.
PayPal (PYPL): Taking a beating against our long thesis, as the BNPL (Buy Now, Pay Later) catalyst has not come to fruition yet. This still needs to pass through the Senate to truly shine. LEAP 65 Calls are getting hammered with them down 30%. No changes to these as of right now.
More stocks were covered on the last two weeks which will be included in the next watchlist update. Now, let’s move on to the S&P levels for tomorrow’s session.
