Daily Plan 7.28.23
Good morning, readers!
Yesterday, we witnessed an actual collapse of Nasdaq, while Emini managed to hold up relatively well. It's essential to take note of the fact that Nasdaq and Emini remained inside value, with another bounce off the value area low (VAL). This suggests that fair prices are currently concentrated within this area. However, given the current upward direction, we are more inclined to anticipate breaks to the upside. With this in mind, we will maintain our focus on upside potential when it comes to stocks as well. It's prudent to stick with those stocks that respect trend lines and are holding upper value, showing consistent pushes to new value levels above.
Apart from this, I did provide some earnings insights on X, which turned out to be successful but could always be improved. Unfortunately, Roku was a miss, experiencing a strong spike after the report, while Intel spiked up as expected. If the market maintains its course into the open, this will cover the situation with ROKU.
Looking ahead, we have the Core PCE release this morning, which is likely to introduce volatility to the indices and stocks. Such volatility can either work in favor of our trades or result in giving back some of the gains we've made. Therefore, it's important to keep this in mind and approach the situation with caution.
Regarding my approach to PCE, it's simple – unless there is an outlier print (indicating a hot market), I will disregard its impact on today's session. A hot print might cause some initial panic, but I won't be alarmed until the Consumer Price Index (CPI) also shows a significant push higher. Monitoring both PCE and CPI together will provide a more accurate picture of the market's overall inflationary pressures.
In due course, Gold is poised to have a robust session to the upside, which will lead to a break in its positive correlation with the indices. Not too long ago, these assets were moving in opposite directions. This development serves as a clue that investors are now accumulating gold with the expectation that some significant economic event is on the horizon. For those who became long-term buyers when I initially suggested acquiring gold around the 1800 handles, buying at the current levels should feel quite comfortable. However, new Bulls must pay close attention to how we respect value areas to the upside to avoid any sudden selling pressure that might arise.
Before delving into the remainder of the plan, it's essential to highlight that Nasdaq has impressively bounced off the Value Area Low (VAL) for five consecutive sessions, providing a clear signal of a potential bounce. In the current situation, we observe a significant gap of 160 handles above this level, indicating yet another major bounce from VAL. Remarkably, a total of over 1,000 handles have been gained solely from these VAL bounces.
Earnings
Events
Scanner
Session Outlook
ES