We have two new activations over the past week, while AAPL and IWM have now hit their second targets, and XLRE and CRM first targets.
New Activations:
- Long MRK
- Long DIS
Previous Activations
- Short NVDA
- Short XLRE (Tgt 1 hit)
- Short CRM (Tgt 1 hit)
- Short AAPL (Tgt 1 and 2 hit)
- Short IWM (Tgt 1 and 2 hit)
- Short SPY
- Short NFLX
- Long MCHI (Tgt 1 previously hit)
- Short XLY
- Long Palladium
Long MRK (New)
-The trade activated on August 11 with a move above the short-term trendline.
-Price has continued higher despite some negative sentiment in the broad market, with MRK now testing the converging 200 and 50-DMAs, right below target 1.
Long DIS (New)
-The trade activated on August 10 with a large move above the trendline post earnings report.
-Unfortunately, price has reverted lower quickly, with four straight negative sessions in a row as the Consumer Discretionary sector has seen some outsized weakness.
-The trade activated on August 9 with a significant move below the upward trendline as well as the 50-DMA.
-NVDA reclaimed the 50-DMA, but bounced lower off the 20-DMA, so this is still looking as a relatively bearish setup in the near term.
-Given NVDA’s leadership this year in the AI fueled market (best performing stock in the S&P 500), if sentiment continues to sour that would not be positive for the stock market.
-A break below the horizontal resistance line on August 3 activated the short trade.
-XLRE hit the first target Wednesday (August 16), allowing traders to take some profits if they choose.
-There could be some potential support at the upward trendline starting in March, where a bounce could ensue, which is right below target 1.
-Higher interest rates pressured real estate equities, a sector that can be used as a bond proxy and trades inversely to rates.
Short CRM (Tgt 1 Hit)
-The trade activated on August 2 with a break below the trendline starting in December of 2022.
-As we pointed out in our piece two weeks ago, we expected follow through towards the first target if CRM declined below the 50-DMA, which has played out.
-The hit of our first target provides an opportunity for traders to take some profits.
Short AAPL (Tgt 1 and 2 Hit)
-The trade was activated on August 2 with the break below the trendline that has held since March.
-While AAPL broke the upward trendline before their earnings release last week, the disappointing Q2 print catalyzed further losses for the largest stock in the S&P 500.
-AAPL has now hit the second target, allowing traders to reap the benefits of some nice profits.
Short IWM (Tgt 1 and 2 Hit)
-The trade was activated on August 2 with the break below the trendline from the beginning of July.
-IWM hit both the first and second targets, with a significant move lower on Wednesday (August 16), allowing traders the option to record profits.
-The next potential area of support would be the 200-DMA.
-The trade was activated on August 2 with the break below the trendline that has held since May.
-The downgrade of US debt by Fitch ratings spooked markets in the first week of August.
-With the sell-off in Tech and other heavily weighted growth sectors, SPY has seen a bit more weakness this week.
-Price has now moved below the 50-DMA, within 1% of hitting target 1.
-The break below the upward trendline on July 20 activated the short trade as NFLX had lackluster earnings results.
-Price is getting closer to the support of the price channel and target 1, where traders could take some profits at what is a relatively strong support level.
Long MCHI (Tgt 1 Hit)
-Stimulus measures vowed by the Chinese government helped MCHI breakout above the trendline and activate the long trade on July 26.
-A surprise cut in interest rates this week did not help sentiment for Chinese stocks, with a continued move lower this week.
-XLY broke below the trendline which activated the short trade on July 20.
-Short-term head and shoulders top pattern has shown continued downside, with price now breaking below the 50-DMA toward target 1.
-Disappointing results from the top weighted stock in the sector, TSLA, was the main catalyst for initial XLY downside, while more recent downside is coming from higher yields pressuring growth stock valuations.
-Palladium broke above its downward trendline on July 18, activating the trade on the long side.
-Price saw palladium rebound back above the 50-DMA and test the top of the downward price channel, only to quickly reverse lower from that level.
