The Fed raised rates this week and the index barely moved, but underneath the surface the RSP and the IWM have been drilled for weeks. My breadth readings went from 70% down to 20%, and that kind of stretch usually puts us in bounce territory. I also go through crypto, which was the strongest thing on my screen, and the Coinbase trade I put on today.
What I want you to take from tonight is the gap pattern: when the S&P gaps 1% or more, that gap usually does not fill, and the drift lower traps traders who position for it. I show you how to trade it in both directions on a five minute chart.
While the broad markets were weak today, there were a few stocks that stood out. We’ll see if they have more to offer as we round out the week.
MDLZ has been stuck sideways and just came back down to support, and so far it is holding. I have bullish signals on the Compound Breakout Tool, squeezes stacked across the board, and some recent True Lows. My line in the sand is $60, and I walk through both the quick scalp and the bigger picture version of the trade.
I found NEO on the options earnings calendar and the post earnings history is what caught my eye: a 15.4% move and a 13.6% move off the last two reports, plus a breakaway gap. It has a high short float, a squeeze building, and another report coming, so I bought the shares today rather than wait for the pre-earnings run to start. I would rather be early than late.
