Market Health Tracking

Investing Strategies Technical Trader's Sanctuary
223

4/8/25

Gundlach “wouldn’t use cash yet” “Odds favor a recession, at this point hard to see how we avoid it” “looking for 4500 on S&P since we broke down earlier in the year, would get a durable counter trade off of that”.

○ The CBOE Volatility Index, known as the VIX, spiked above 60 for the first time since August. The last time the gauge hit those levels was on Aug. 5 when the Nasdaq fell to its 200-day moving average before rebounding.
○ On Monday, the Dow Jones Industrial Average declined 0.9%, or 349 points, while the S&P 500 fell 0.2% and the Nasdaq edged higher.
○ But the jury is still out on whether the stock market has put in a bottom. As long as indexes remain below the 200-day moving average, risks abound. Tariff wars and upcoming earnings compound those risks and it is best to proceed with utmost caution.
○ Naz closed at 52% of the trading range.
○ Small caps on the Russell 2000 outperformed in the early going, rising 2.6%, but fell 0.9% at the closing bell.
○ Of the 11 sector SPDRS, tech had the best day and equal-weighted tech was even better.

Earnings season kicks off this week with JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC) and BlackRock (BLK) reporting their first-quarter earnings on Friday

**I appears I did not post this from yesterday.

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4/8/25 - an exemplary day…

it showed us what to expect for next few weeks or months. Any word, any rumor can cause a 4% move. Trump loves to be ambiguous, so it is really hard to invest on something he says. “we’ll just have to wait and see”, “there will be h3ll to pay”, “many people are calling me” (and saying what?)

Somehow, we are in day 2 of an attempted rally, but it is hard to imagine a reasonable scenario that gives us a good FTD in the next couple weeks. Is everyone going to cave? Is China going to cave? Are we going to drop the 10% all-around tariff? What is that positive news that gives us a V-shaped recovery we are scared to miss out on?

IBD:

But keep in mind that follow-through days can fail, especially when there’s not a lot of merchandise to buy. After the recent selling in some gold, insurance and utility stocks, leadership is even more out of focus now.

The cumulative Trump tariffs work out to nearly $1 trillion in tax hikes on U.S. importers. At 3% of GDP, that’s the biggest U.S. tax hike since 1942.

In the video, they mentioned this wise reminder…
David Ryan says as you go up, a lot of people are going to want to sell.

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225

4/9/25 - Delays from Trump, end market Slump.

[Once again, I forgot to summarize and post my notes last night, here they are in raw form]

• Brad Gerstner (Hedge Fund guy) talked to a number of Tech CEOs today and this is the kind of framework they needed to see. Important start but more work to be done. They were very concerned about Peter Navarro’s stance, (too radical and impossible).
• Gerstner says we are now in a better place than on April 2 yet prices still way below that.
• Does the market now believe that anytime it goes down enough, it will be bailed out, thus a Trump-Put like the old Fed-Put.
• Will importers now stuff their warehouses for the next 90 days so they can skate by the following 90 days? Or will there be so many concessions importers won’t feel that is necessary.

IBD: day 3 of attempted rally
○ Tariffs delayed 90 days
○ The Dow Jones Industrial Average leapt 7.9% in Wednesday’s stock market trading, its biggest gain since March 2020. The S&P 500 index vaulted 9.5%, its strongest performance since October 2008. The Nasdaq composite spiked 12.2%, the best gain since 2001.
○ Software Sector ETF (IGV) soared 11.65%, with Microsoft and Palantir stock key holdings, along with CrowdStrike. The VanEck Vectors Semiconductor ETF (SMH) surged 17.7%. Nvidia and Taiwan Semiconductor stock are two huge SMH members. ARK Innovation ETF (ARKK) raced 16.6% higher
○ If a follow-through day happens soon, enter gradually. The risks of a failed FTD are high given the sharp sell-off and headline-driven market. A FTD could fail right away or hit resistance at the 200-day line. Very few stock charts look healthy
○ CPI early Thursday
○ Wednesday was a classic relief rally, with investors clearly relieved that Trump tariff pressure eased somewhat. Will that momentum continue or will the market waver or resume a retreat as tariff concerns remain high?

○ First, big up days by themselves do not guarantee an end to the bear market. Decades of stock market action prove this. Let’s go to the two-month period of March and April 2020. As the global Covid-19 pandemic shut down economies around the world, the Nasdaq plunged from a then-high of 9,838 to 6,631, a 33% shellacking. Near the end of that decline, the Nasdaq posted a flurry of huge up days. But none of them alone turned the market around.
○ On March 10, 2020, in the middle of the stock market’s selling avalanche, the Nasdaq composite jumped nearly 5%. But then the index dropped hard the next two sessions. The next day, bargain hunters propped the Nasdaq up 9.4%. Two days later on March 17, the index leapt 6.2%. Volume was intense. (None of these were the bottom)
○ Eventually, sellers got exhausted. The Nasdaq bottomed out at 6,631 on March 23. That session showed a big intraday swoon. But curiously, by day’s end, the tech-rich index finished only 0.3% lower. It also finished nicely in the upper half of the day’s trading range. Put another way, the tide began to show signs of turning from a heavy supply of shares from willing sellers to emerging demand from hungry buyers.

The CNN Fear and Greed Index, headed into Wednesday’s rebound, stood at the “Extreme Fear” zone at 3 on a scale of 0 to 100

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226

4/11/25 (Friday) Walking on Sunshine

A nice up day to convince us the coast is clear, but it is not. While the markets had a big day, the volume was lighter, so it does not count as Bill O’Neil FTD. Webby calls it an “FTD in Spirit”, but a dangerous one. He has had Swing Trader in cash for the ride down, and Fridy had them put on their first two 1/2 positions, the SPY and the QQQ. Nothing leveraged and no “heat” stocks. He warns us to be very cautious.

Naz and S&P are below 200, 50 and 21dma. Webby is waiting for three days above the 21dma before getting more aggressive.

IBD:

Friday’s action shows that markets are looking for a reason to rally, and Trump could provide one with a series of deals that resolve economic uncertainty by limiting tariffs on trading partners such as the European Union, Japan, South Korea, Mexico and Canada.
…
In the meantime, investors are advised to largely stay on the sidelines and focus on stocks that aren’t especially volatile, with an average true range of around 3 or below. That metric is available on IBD’s MarketSurge.
…
Late Friday, the Trump administration exempted Apple products, including the iPhone from the additional 125% tariff on Chinese goods and 10% baseline levy on imports from other countries. Also exempt: Other smartphones, servers, memory chips, solar cells, flat panel TVs and many other tech goods that are often made in China. That includes Nvidia, Dell Technologies (DELL), Hewlett Packard Enterprise (HPE) and Super Micro (SMCI).

Note from Friday Video with Webby

○ “Even if we had the volume Friday, the market is not in the right position and we would be a little suspect with it”. But we have some encouraging signs, but still very cautious.
○ That big blue up bar Wednesday was “normal and natural” in a market like this. Probably just a short squeeze. Thursday and Friday actions were normal as well. Want to see the price bars getting shorter as investors “decide” on a proper price.
○ 17,238 on Naz was a recent low and Webby says that is acting like a magnet and that is where the shorts want it to go (because they want to make it fail to break above that and thus be able to go short again)
○ Alli dipping her toe in with small positions in SPY and QQQ, nothing leveraged.
○ Webby had Justin go look for the biggest days in the market so we could see what happened afterwards. (See the 14 minute mark, really worth watching)
○ “When they work, you get above the 21dma and your low gets above it for 3 or more days” Pete notes that the Naz was turned away at the 21dma on Wed, but we could still overtake it.
○ Webby “There are a lot of double bottom bases out there, more than I’ve seen since probably 1998”
○ Webby is looking for stocks that did NOT test the 200dma in this decline (e.g. SPOT)
○ We might get a tradable rally here, but we are not going to take anything too seriously until we get above the 200dma because you could have a lot of damage"
○ Webby notes that the chance of a follow through working is 50/50, and he suspects the odds are lower here, but he has not done the work.

Edit: Futures are up since Trump exempted some items from tariffs. We will want to watch how the market closes Monday, will it reverse the gains or finish near top of the range. That will be expository.

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227

4/14/25 - No FTD for you!

Markets couldn’t pull out price and volume. Good, I don’t think it would be a successful one at this moment. Trump says he is reducing some tariffs, the Lutnick says, but just for a minute. Market up, down, up.

Naz was once again turned away by its declining 21dma and S&P is still trying to move up and test it. I would prefer to see them creep above the 21 and stay there, then have an FTD. But you don’t always get what you want.

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228

4/15/25 Forever, no Never 21

Turned away at the 21dma again. Tomorrow will be a good day to watch. Nvidia late Tuesday said it would take a $5.5 billion charge related to exporting H20 GPUs to China, so NVDA was down 6% after hours, dragging futures with it. (QQQ down 1.24% after hours).

How bad will it be? Will there be an upside reversal?

Lots of good stocks in double-bottom bases, which IBD says are common bases in choppy markets. PLTR, CRWD, MELI, NFLX, SPOT

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229

4/16/25: I fell into a burning ring of fire.

NVDA drags market down, then Powel kicks it in the nads. Powel essentially told the “market” that there is no Fed put, the “market” did not like that. The problem with inflation from Tariffs is that is cannot be controlled by interest rate changes, the Fed does not have as much power to fight it.

Naz went below the bottom of the 4/11 upside reversal day, S&P did too, but only by 2 cents. This is a place where swing traders might have had stop losses in. Maybe Naz can hold 16,000 and S&P 5,000. Just grasping at straws.

One day soon, Trump might come out with a big deal on tariffs with Japan or Europe and we take off again. Very hard to invest in this market. Maybe Gold is the easiest.

Market Closed on Friday. Good!

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230

4/17/25 (Thur) NFLX and Chill?

Naz and S&P faded off highs today. The S&P 500 rose 0.1%, while the Nasdaq composite slipped 0.1%. Also, the small-cap Russell 2000 gained 0.9%

Both still below 21dma. Still in day 9 of attempted rally.

NFLX up 4.4% after hours in earnings report, is this enough to spark a rally. Hope not, it would sucker me in and there is too much doom in the air.

IBD:

The market may simply need more time, perhaps even another leg down, before a sustained uptrend takes hold. That could involve a tradable rally, with the S&P 500 running up to, say, the 200-day moving average before falling back.

What investors need is a clear market uptrend, emphasis on trend. One good day or intraday bounce off lows is not a trend.

The risks of a failed follow-through day are high

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4/21/25 - I will paste in later

4/22/25 - FTD, but lots of weaknesses to worry about.

Dow Jones Futures Jump On Trump’s China, Powell Comments;

  • Trump: “I won’t fire Powell”.
  • Bessent: China tariff war is unsustainable, expect resolution in near future (is this knowledge or stating the obvious)

The tech-heavy index surged above the 16,000 level, rising 2.7% in higher volume. Also, the Nasdaq marked a follow-through day on the 11th day of the rally attempt, along with the S&P 500, which jumped 2.5% in higher volume. Russell 2000 small-cap index each rose 2.7%.

But a follow-through day is supposed to convey power and strength, and that was missing to some extent Tuesday. The Nasdaq briefly poked above its 10-day moving average but eventually closed below it. The S&P 500 closed right at its 10-day line. Overhead supply is still an issue for both indexes after sharp sell-offs. Both still below 21,50,200dma

Naz and S&P are both below 21, 50 and 200 dma. Need to get that fixed.

CNBC talking head chatter:

  • Lowest EPS beat rate in a long time (but early in the reporting cycle)
  • Expectations are very low
  • Weak dollar helps mitigate tariffs (charged on our goods, but makes imports even higher?)
  • Wealth effect is negative
  • Bessent: China tariff war is unsustainable, expect resolution in near future (is this knowledge or stating the obvious)
  • Market is overpriced if we have a recession.
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4/23/25

The markets gapped up on the open, with Naz up 4.5% at one point. This put them above their 21dma, but it was all downhill from there. They finished with a gain, but also finished below the 21dma and gave up nice gains in a show of weakness. Still lots of work to do. Remember the Webby review of past big downtrends like this, we need to see daily swings get much smaller before it really starts a sustainable run.

IBD:

A pause around current levels could be constructive, letting more stocks catch up or forge handles. But a close below the lows of Tuesday’s FTD would be highly bearish.

Despite two days of strong gains for the indexes, IBD’s recommended exposure stays at 0%-20%, mostly because of a lack of buy candidates at the moment.

Useless prediction: pretty flat day tomorrow.

.

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4/24/25

Naz and S&P mark third consecutive up days. The S&P 500 index popped 2%, its first three-day streak of 1%-plus gains in two years. The Nasdaq had its third straight 2%-plus gain, the first time that’s happened since April 2001. With that and the strong moves above their 21dmas, IBD has raised exposure to 20-40%.

IBD:

Investors can be adding more exposure, doing so gradually. If the stock market rally has legs, it won’t take long to go from, say, 20% invested to 90% even with incremental buys

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