Good morning traders!
Stocks are currently experiencing a situation where they are breaking down from their usual trends. Many stocks have been moving downwards significantly. For example, Tesla's stock dropped by 20 points from its level of 270, and the session ended with a decline of over 5%. As I mentioned before, sometimes it only takes one session for a stock to break out of its trend and fall further. However, it's important to note that this doesn't mean the trend is completely invalidated. If the stock manages to go back into the expected price range, we might see it rise again. It's crucial to consider the bigger picture and determine whether the stock is currently in a balanced state or following a clear trend. This understanding will help guide our decisions.
Advanced Micro Devices is another stock that experienced a significant decline below an important level of order flow support. Once it dropped below 117.03, it steadily continued its downward movement, reaching as low as 112, resulting in a nearly 7% decrease. Interestingly, this level was just above a significant low volume node (LVN), indicating that once we broke below that point, there was a strong wave of selling. This pattern has been observed in many high-performing tech stocks recently. It's important to note that there is still a possibility for the technology sector to give back some of the gains made in 2023, but currently, we are only expecting a correction rather than a major decline.
Google also experienced a significant drop below a crucial order flow level, indicating a breakout from its previous value range, which triggered intense selling pressure. Going forward, bearish traders will be hoping to see these stocks stay below the low volume node (LVN) or outside the value range they recently broke out of. As the stocks continue to decline, it would be wise to consider the value area high (VAH) as potential shorting zones. The suggested targets for short positions can be set at the current value area's point of control (POC), the current value area low, and keeping additional positions below the new lower value area, if established.
Emini managed to maintain support at 4409 consistently, resulting in several small price increases from that level. Although not considered ideal, this was the prevailing market condition for the day. In contrast, the Nasdaq market presented numerous opportunities as we began the session with a significant 90-point decline below a crucial order flow level. Subsequently gapping down, bringing a substantial 120-point decline. On the other hand, the oil market demonstrated resilience by staying above a certain level without experiencing any selling pressure below it.
Below is the contracts price change once price moved through any level inside the Daily Plan.
Previous Day Recap
AAPL [185 Puts 1.74 > 2.65]
TSLA [270 Puts 5.8 > 14]
NVDA [430 Puts 6 > 12]
MSFT [332.5 Calls 2.66 > 4.7]
AMZN [125 Calls 1.71 > 2.5]
AMD [117 Puts 1.94 > 5.79]
GOOGL [121 Puts 0.74 > 1.58]
META [280 Calls 4 > 5.38]
BA [210 Calls 2.74 > 3.9]
PLTR [15 Puts 0.4 > 0.81]
BABA [87 Calls 1.83 > 2.7]
SBUX [101 Calls 0.95 > 1.67]
UNG [7 Calls 0.12 > 0.25]