Pete Stolcers | OneOption@1OptionsTrading
The First Shoe Has Dropped | OneOption - Stocks. PRE-OPEN MARKET COMMENTS THURSDAY - This morning the S&P 500 is trading below the 50-day MA and the low of the week after the first round of mega cap tech earnings. Revenues were good, but capex spending is taking a huge bite out of profits. TSLA and GOOG plan to continue investing in AI and that has investors nervous.
Next week we will hear from other tech giants and we are likely to hear similar.
The overnight breakdown it noteworthy because this also breaches an L+ trendline for a wedge formation. If this move gains intraday traction and if we close on the low, we could see follow through selling. Short sellers are typically passive ahead of mega cap tech earnings and these reactions will embolden them.
I felt this undertow a few weeks ago and it is why my market bias changed from neutral to slightly bullish to slightly bearish. This is why we have not been entering swing trades. Your overnight exposure should be minimal. You can evaluate this move lower objectively instead of worrying about your long positions.
We have been focusing on day trading. Let's wait to see how steady the decline is. An 85 point drop in futures is likely to have follow through selling. However, a bounce would provide us with a much better entry point. This is our best case scenario this morning and when we get it, you will have to be ready to short quickly. Obviously, if we stack three consecutive long green candles on the open, you don't have to hurry and we need to see more proof before we buy. I see this scenario as unlikely. Chasing this drop early leaves us exposed to a bounce in the first 45 minutes. If we have a gap and go lower, our safest play is to let it go and to wait for a bounce. That will provide us with a better entry point. oneoption.com/daily_bulletin…
