Brief Summary
This video provides a detailed analysis of the stock market, focusing on the S&P 500 (SPY), NASDAQ 100 (QQQ), and Russell 2000 (IWM). It examines candle structures, Fibonacci levels, anchored VWAPs, and volume profiles to assess market trends. The analysis includes both weekly and daily perspectives, incorporating market internals and sector performance to build a logical trade plan. The video also identifies potential trade ideas and key levels to watch for the upcoming week, considering the shortened holiday trading schedule.
- The analysis suggests a cautious approach, advising against aggressive shorting at support levels.
- Key levels for potential entries and exits are identified.
- The importance of monitoring market internals and sector performance is highlighted.
Intro
The presenter welcomes viewers to the Trade Brigade weekend show, outlining the plan to analyse market data and construct a logical trade strategy. He encourages viewers to like the video, subscribe to the channel, and explore the resources in the description. He also teases six additional trade ideas to be shared later in the show.
S&P 500 (SPY)
The S&P 500's weekly candle structure shows a red body with equal upper and lower wicks, with sellers having a slight edge due to the weak close in the lower third of the candle range. The bar-to-bar count is bearish, with a close outside the previous week's range and an inside candle breakdown. However, the lower wick indicates buyer support at the quadruple bottom low and the weekly 20 SMA. A weekly close below 654 would raise concerns about the weekly trend. Fibonacci analysis shows the action is still above the 38.2% retracement level, which is not overwhelmingly bearish. The price has closed underneath the trend channel low, acknowledging some bearish pressure. The market has closed underneath three anchored VWAPs but remains above five others. The current pullback is about 4.5% from the all-time high, within the average range for a yearly pullback. The market closed underneath the high volume node, suggesting potential overhead supply.
The weekly expected move indicates bearishness, with the upper edge aligning with the bearish engulfing high and the lower edge confirming a lower low. The daily trend count remains bearish with lower highs and lower lows. The undercut of the Thursday low on Friday suggests sellers are not willing to continue selling at the weekly demand spot. Remaining underneath 663.25 maintains a bearish view, but shorting into the low is not advised. The upper wick of Friday's session shows rejection of previous support as resistance, aligning with the 50% Fibonacci retracement of Thursday's breakdown. Staying underneath the 61.8% Fibonacci level rejects the bearish engulfing high and the daily 20 SMA. The Thursday breakdown snapped through both the 20 and 50 daily SMAs, indicating a change in tone.
The analysis suggests remaining bearish on smaller time frames unless the market moves above the bearish engulfing highs. The strategy involves waiting for a bare flag to form, breaking the level, and setting a lower high before shorting. Downside targets include the previous breakout point at 646.30, the gap fill reversal level at 640.85, and the double bottom low at 633.85. A bullish tone would only be adopted if the market clears the high from both bearish engulfing highs. The hourly chart shows a downtrend, with buyers failing to step up on the gap up. The undercut and rally from Friday indicate some exhaustion from sellers. Pathing ideas involve rallies that reject and keep the bare flag in play, with potential brigade bolts underneath 652.50 targeting lower levels. Market internals show huge volume inflows on Friday, with an advancing decline line and a cumulative tick build, suggesting buyers stepped up at the demand low. However, market profile analysis reveals single prints and a poor high, indicating too much overhead supply.
NASDAQ 100 (QQQ)
The NASDAQ 100's weekly candle structure is similar to the S&P 500, with a solid red body bar and a lower wick closing right on the quadruple bottom low. This indicates a deterioration of the weekly look. Closing back above the weekly 20 SMA is slightly more compelling, but closing underneath both previous weekly ranges is a concern. Breaking the trend channel and closing underneath acknowledges red flags on the weekly chart. A definitive downtrend is not yet confirmed until a candle closes underneath previous resistance. Fibonacci analysis shows the price is right at the 38.2% level, holding onto bull flag consolidation. The NASDAQ has a deeper pullback of about 7.3% due to tech and AI concentration.
The weekly expected move shows an upper range at 607, aligning with the daily 50 SMA, and a lower edge at 573.13, confirming a lower low. The candle close on Friday is right at the level. The upper wick on Friday's session rejects a potential lower high underneath previous support. Consolidating underneath 599.50 is bearish, looking for a brigade bolt into the top end of the weekly level around 580. Taking out the neckline of the double bottom at 577.5 would put the gap close and the lower edge of the balance from back at 560.25 on the radar. Moving above 599.50 would not change the tone to overwhelmingly bullish until a daily trend reversal occurs. The bearish engulfing highs between 611.50 and 613.17 will rule the market.
The analysis suggests waiting for a trend reversal before changing the tone, looking for a follow-through day with a 1% or more up day on higher volume. The door is open for a break if the market starts to get more acceptance underneath. Fibonacci analysis on the hourly chart reinforces the 599.50 level, with the high of Friday underneath the 38.2% retracement, indicating bare flag consolidation. Bears have the upper hand, with the market underneath all-time high and previous anchored VWAPs. A look below and fail on the key level may lead to a counter trend. A daily lower high would be an awesome spot if the hourly trend flips up and then back down. Shorting the lower high, not the equal low, is preferred, with a brigade bolt underneath 581.25. Market internals show volume inflows on Friday but not equal to the Thursday breakdown. The cumulative build is a little bit stronger on Friday than Thursday. Market profile analysis shows single prints not even getting tested on the Friday rally, with the value area still low and a poor high and low.
Russell 2000 (IWM)
The Russell 2000 shows a hammeresque style bar with a small candle body, a much larger lower wick, and a very small upper wick, indicating buyers stepped up. The close inside the previous week's range is slightly more compelling. This is a potential higher low, with previous resistance acting as newfound support and capitulatory volume. If a rate cut is on for December, small caps should like that and start to reprice a move back inside the consolidation. Repricing to the midpoint of this consolidation seems reasonable, with the market holding its breath through the FOMC meeting on December 10th. The Fibonacci pull shows an overshoot of the 38.2% level, closing close to it, with support over the 61.8% level. The anchored VWAPs look okay, closing over the anchored VWAP from the gap up.
The biggest thing that needs to happen if this market is going to turn around is not just the recapture of these lows and the bearish engulfing high from Thursday, but breaking and exceeding the upper edge of the weekly expected move. The high volume spike is really here, so recapturing the 241 level is important. A lower high could still lead to bearishness. Exceeding the upper edge of the weekly expected move would indicate repricing of the Fed rate cut into the end of the year. The hourly chart shows a downtrend. A good first step would be consolidation here. The rally from Friday did not give back into the close and recaptured more than 50% of the range from the Thursday breakdown, closing over the 61.8% Fibonacci level. Spending time over 235 flat, over the 61.8% Fibonacci level, should generally increase the odds of the 100% retracement.
The analysis suggests small caps are trying to put up a fight and suggest this is overcooked. Looking at this through the lens of a double bottom requires seeing it to believe it. A reserved and neutral to bearish approach is advised. The prevailing winds are down, and one off-the-cuff comment about inflation still being an issue could send the market back below 235. Brigade bolts underneath this zone would really start to get into that weekly level again at 225.85. Market internals show way stronger volume inflows on Friday versus the outflows on Thursday. The trend is higher, and the cumulative build is stronger on Friday versus Thursday. This makes sense to see a stronger inflow when the Fed starts to get a bit more dovish again. Market profile analysis shows a completely different story, with single prints and the point of control closing in the single prints.
S&P Sectors
XLV Healthcare is up 2.16%, and XLP consumer staples are also up, both defensive sectors. The TLT is up about 47 basis points. Semiconductors are the heaviest weight risk-on sector and are down, along with XLK, energy, and discretionary. Financials have not been participating via any sort of rotation. XLV looks great with a nice little breakout, but it's tough to play. XLP is interesting because it closed the gap and rejected after failing underneath what could have been a very easy flip from previous support to newfound resistance. Retailers like Walmart and TJX have shown relative strength. The TLT doesn't have much to do. Semiconductors have a huge bottoming tail hammer, but there's still plenty of room for a lower high. Consolidation sub 336.50 is a big problem, leaving a bunch of overhead supply. XLK has the same commentary, with a big problem with the close underneath 279.
Energy doesn't have anything to really say about it. XLY discretionary has Tesla and Amazon problems. Industrials overshot an attempted rally, but there's a lot of overhead supply. GE is breaking down underneath these lows. Financials have been a big problem ever since the failed breakout of Goldman Sachs. Utilities are defensive and are going sideways over the prior pivot high. Real estate has problems, with stagnation for 7 months. Materials are underneath overhead supply and look bearish. XHB has a nice reversal on the Friday session, with a little bit of relative strength over here on the prospect that maybe rate cuts will be back on the table. Communications are still in a bearish downtrend. Netflix has entered a more severe downtrend. Meta is failing post earnings and is being punished for the capex.
Sector ratios show the glue is no longer being glue. XLF is trying to remain stable by going sideways, but it's still a problem underneath a descending 50 SMA. The A set is bearish, with 0 for six risk off. Gold is an interesting trade. Bitcoin has been obliterated and is continuing to act as a riskoff signal. The sailor shift tool is also risk off. Bonds haven't quite broken down yet, but they are certainly not breaking out. Rates are coming down a little bit on the commentary from the Fed. The Fed watch tool is telling us that there's a lot of uncertainty around this December meeting. Employment data was much stronger than the forecast, but the prior was revised down. The unemployment rate had a small uptick to 4.4. PMIs also came out stronger than expected on the PMI side for services.
Fundamental Evidence
The biggest watch on the earnings calendar is Dell. The magnificent seven companies reported actual earnings growth of 18.4% for the third quarter, below the average earnings growth rate of 28.8% over the previous four quarters. This is a slowdown in growth. Bonds haven't really diverged too much yet. Credit spreads are still expanding and widening. The HYG divergence is the whole reason why we don't want to get short in the hole. Total breath shows a bit of a snapback on the Friday session, but it's generally still in a troubling look. Volatility is elevated, with higher lows.
Technical Evidence
The presenter highlights the HYG divergence, noting that junk bonds are suggesting a higher low, advising against shorting into a lower low on the S&P 500. Total breath is still in a troubling look, with a negative impression on new highs versus lows. The RSP is trying to battle back into this range, suggesting the concentration in Nvidia is the problem. Volatility indications show VIX is elevated with higher lows, and VIVIX is also still elevated. V futures are still in contango, which is bullish, but still elevated, which is bearish.
Core List (NVDA, AAPL, MSFT, AMZN, GOOGL, AVGO, META, TSLA, JPM, PLTR, AMD, HOOD)
Nvidia had detrimental earnings failing, with trapped overhead supply. As long as it's underneath 184.75, failing the daily 50 and 20, it's stuck in consolidation. Apple is being seen as a safety asset, with sideways consolidation. On Thursday, it did not make new lows and closed over the open from Thursday and the daily 20. Microsoft has a weekly double top, broke the neckline, and is sitting on the daily 200. A recapture of 474.25 could lead to a thin structure rotation towards 489. Amazon has support off the daily 200, with a long position from the lows. The target is a counter trend move towards the daily 50. Google has relative strength, with new stuff coming out with the Gemini 3.0 model. Broadcom has nothing to do in the box. Meta has a big downtrend, but it gapped up on the Thursday session and did not make an engulfing low. A counter trend move is possible. Tesla is waiting for 365 on the downside as a long. Under 386.50 is a possible short into 365. JP Morgan is on the bottom end of this range. Palantir is over the daily 200 SMA, with a hammering bottoming tail on Friday. AMD looked into the gap and failed. Robin Hood has a short put position on, with lower highs underneath the daily double top neckline.
Trade Ideas (GLD, COIN, MU, WMT, OKLO, RKLB)
Gold is getting really tight up against the daily 20 SMA, building a nice little balance range. Taking out the highs and Fed talk about lowering rates could lead to upside over 377.25 on the GLD. Coinbase had a very precise low on that Friday session, with 231 as a gap close. A Stevie Wonder counter trend move over 245 makes some sense. MU is an undercut and rally recapturing the daily 50 SMA. A two-pronged approach is advised, with a long from 211 into 218 or a lower high for a short. Walmart is trying to get long off of 104 or allowing this to tighten up into some kind of inside candle range. It has clear relative strength. Oklo is looking for the previous breakout point to possibly act as newfound support. Rocket Lab is building something out near the 200.
