Weekend Update
Good Morning,
We finally saw a capitulation day in semiconductors on Friday with Nvidia closing down precisely 10% on the day. We had discussed this exact probability not so long ago in the chatroom. When stocks go on parabolic runs as Nvidia did this often happens, in fact I have seen it many times over the years on many stocks. As mentioned here in late March the month of April is often the weakest month of the year for Semiconductors and were not to be chased and liquidity issues surface as taxes are paid and bank deposits shrink.
In the broader market it wasn’t actually a bearish day with regional banks closing up 2.6%, the Dow Jones up 200 points, IWM green, Financials green, TLT green and the high yield corporate bonds ETF HYG green so the selling was very specific to tech and semis in particular. I can’t promise we have reached a bottom but the broader market sell off didn’t occur or has at least paused in the latter part of the week. There is a reasonable case here for at least an oversold bounce based on the Fibonacci data (see below).
As I have been saying for weeks, keep the sizing SMALL and use stops at least until the end of April. It is imperative to stay patient.
I am informed that the recent bugs in the Iphone chat app are being resolved this weekend.
What To Expect Next
In the unlikely event Powell hikes then it’s a straight short to 4550 however the most likely scenario looks like 4832. The next inflation data release is the CPI on May 15 and the next FOMC meeting is on April 30th to May 1st. In the meantime we can expect more chop so keep the trades small. The market needs some positive news to continue to rally.
SPX has found it’s bottom at the 100 day moving average at 4930
SPX bounces from here and then back to the either the .382 Fib at 4832 or the larger demand zone between 4700/4800 - the 0.5 Fib is near 4700
Powell hikes rates and SPX tests the .618 Fib at 4559
The market absolutely respects these Fibonacci levels make no mistake about this, they are magnets along with the moving averages so lets have a look at the SPX/NASDAQ/SMH/NVDA/BITCOIN fibs plus the latest stock recommendations. Below you can see just how well these Fibonacci levels act as support.
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