12/20/24: Friday Video with Webby…
○ Friday’s mornings lows are now a key line in the sand for traders. As long as we are above that, we should feel ok.
○ It was proper to reduce exposure on Wednesday. Webby, Justin and Chris (Gessel) went back and looked at stocks reactions after historically similar breaks in the market (1970s to now). Most of them needed a lot time before they worked themselves higher. Some only needed a few days (10-15%) and about 20% went lower. If we close below Friday’s lows then we are probably looking for an 8-10% correction that takes a few weeks. But if that low holds, then we could be looking at a rally into the end of the year.
○ We should now be able to go through our lists and find the leaders and the laggards and then make our buy/sell decisions on that.
○ “This was a good week for traders because it gave us a lot of information”.
○ This week on SPY and QQQ, we closed in the lower area of the trading range. Bill needed to close at 40% or higher to show support.
○ Webby wants to see the daily lows start to close above the 21dma. Good news is the highs stayed above the 21dma. The RSP, is just ugly and below 21 and 50 and this is a logical reason to feel negative. IWM also very bad looking. The FNGS is the best and found support at the 21dma.
○ Webby had sold his GOOG, but bought it back today with a stop at the bottom of today’s lows.
○ SPY has fallen out of the regression channel (1 std dev). We are so far out of the channel that Webby is throwing out the earlier trend (line) and waiting enough time to establish a new trend to work with. QQQ looked better and closed back in the channel on Friday. Webby wants to see it return to the mean regression line next week as a sign of strength. The Nasdaq composite was even stronger as it held support at the bottom of the channel. So Webby is bullish on that. But a close below Friday’s low would be bearish.
○ SPY made a 50% retracement and closed slightly above that on Friday.
○ Webby learned from Bill that when there is a market correction, you want to save your best stock until the end. That is, sell them last if necessary.
○ GOOGL: held up well,
○ AVGO: Webby "We want AVGO to take out today’s high (Friday), and we certainly don’t want it to go below the low of the gap. But if it tests that and moves back up that would be an entry point.
○ GEV: The weekly looks like a classic model book stock. IPO moves up, goes sideways, big advance then a first-time test of 50dma (10 week). But if it closes below this week’s low, you would exit, if not before that.
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12/27/24 (Friday)
Notes from the Webby video.
Worth watching first 10 minutes Santa Claus Rally Fizzles; United Airlines, Boston Scientific, SE In Focus | Stock Market Today
○ Webby: "It was not so much today that bothered me, but yesterday. Because…" had bad break last Wed (Powell). Then upside reversal w days later, which is normal and natural. If not for that, it would have been normal to crash. But on 12/24, we got the lows above the 21dma and closed near the high, back over 20k. With that kind of action his expectation was that we would go up, maybe into new highs. But when that did not happen on Thursday, he started cutting back very quickly and throughout the day. He got swing trader to sell almost everything because he wanted to avoid a day like Friday (so he did avoid it). Still bullish intermediate and long-term, but very cautious short term based on Thursday’s action.
○ RSP chart is “very sick”. RSP represents the “average stock” for Webby. SPY got support at 50dma, but Webby calls it “weak” since high is below 21dma. Feels like market wants to test the low of the upside reversal day, which would be normal and nature. Are there buyers there?
○ If you swing trade using strength, this is a dangerous time to get chopped up.
○ Market seems worse than it is showing.
○ XLRE chart looks like someone who likes to short would love it. Has a little ledge with a wedge bumping up on the 200dma. Looks like it needs to break down to resolve itself.
○ January can be very tricky, you can have a really good Jan that was really hard to handle.
○ Don’t forget, Bill was willing to turn on a dime if the market told him to.
○ UAL chart looks really good, currently an “A” stock. Very liquid stock, unlike some of the “heat” stocks out there. Bill would focus on 5 or more up weeks in a row and he considered that a sign of institutions buying. Webby’s studies bare that out. This move is in the spirit of a flag pole, with strong continuous buying and then not giving it up (UAL is having a tight consolidation. Webby was in it and backed out of it just because of the market, the stock was not doing anything wrong.
○ BSX, run-of-the-mill base, sales have a little acceleration, earnings ok. Not an A-caliber setup, but a safe place for now. If the “heat” started working, he would ditch this and move to heat.
○ SE: Found support at 50dma, little upside reversal. What Webby likes is that you will immediately know you are wrong if it goes below the 50dma. If this were to take out Friday’s or Thursday’s high, it would be something he would consider. This is a B or C-caliber setup right now.
○ At 23:56, video starts looking at market precedence similar to recent action.
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1/10/25: Friday Video
○ It’s one thing to be going above and below a moving average, but when your high starts living below it, that is where you start rolling over. For the SPY, next level of support in 567.89, if that does not hold, we could be looking at 200dma, which would mean a lot of damage.
If you look at the RSP, you can see what might happen to the SPY. IWM is almost at 200dma and 11.5% off its high.
○ Market is fixated on economic numbers.
○ Bill never brought up the bond market because everything is already built into the stock market.
○ We need to get back over the 50dma, then above 21dma, then lows of the day need to be above 21dma.
○ Earnings season is starting, that could overcome economic worries, or reinforce them.
○ Now is the time to be cautious and trade with smaller positions.
○ SPY “feels like it wants to come down to the 200dma.” We get there by breaking 21dma (done) 50dma (done) then lower areas of support. Me: as someone once said about how he went bankrupt “slowly at first, then all of a sudden”.
○ IBIT: Webby has a position. It looked like it might try to hit new highs but backed off. Now at 50dma and if it can’t hold that Webby will “back out of that position”.
○ PODD and ISRG are worth watching. GMED looking good, but had a downside reversal today.
○ UTES (Util ETF), could buy it here and use 50dma as stop. Should go through the holdings this weekend for strong stocks.
○ WMT chart looks good, even better than COST.
○ A number of “heat” stocks (e.g. quantum computing) took haircuts this week, and that is good for the market to blow off some of that froth. This is also reminiscent of 1999.
○ GOOG and META still look good. Swing Trader would likely add META if market warms up next week. RS line looks very strong.
○ VST, good base. If you bought today and it takes out Wednesday’s low, then you would sell. Webby will be looking to add. Has RS blue dot.
○ UAL: Webby treating it as a HTF, but not a classic one. Moving up a lot and holding tight without giving up gains shows there is a change in what investors believe about the stock. An HTF can go a lot further than you think they might do.
○ Webby’s candle charts point to weakness continuing.
○ SPY 50% retracement failed to hold.
From Market School: When your highs are below the 21dma for 5 days, bad things can happen and when it is 10 days, worse things can happen. All the indexes now have their highs below 21dma, so watch this count.
○ The Webby “Bob Marley” (green, yellow, red) ATR indicator showed the RSP going “bad” before it had even breeched its 50dma.
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Had TA charts from Jessica Inskip, which he does on occasion. She had previously pointed out both trendline and other levels of support that needed to hold. They have not, so the probability is for continued declines.