Markets slipped lower on Monday, posting the first Down Friday/Down Monday of 2023. We’ll discuss the significance of this in the “Timing” section.
The declines were noticeable but not dramatic.
All four major indexes ended lower…
- Dow Jones -0.1%
- Nasdaq -1.0%
- S&P 500 -0.6%
- Russell 2000 -1.4%
Sector Round Up
Some winners emerged from the 2-day selloff. 2 of 11 sectors found enough buyers to close higher.
- Utilities (XLU) +0.9%
- Consumer Staples (XLP) +0.1%
At the bottom…
- Technology (XLK) -1.2%
- Communications (XLC) -1.2%
- Materials (XLB) -1.1%
The emerging AI sector continued to produce massive winners…
- C3.ai (AI) +7%
- Remark Holdings (MARK^) +10%
- BigBear.ai Holdings (BBAI) +18%
- SoundHound AI (SOUN) +43%
Not to be outshone, meme stocks surged higher on Monday too.
- GameStop (GME^) +7%
- AMC (AMC^) +12%
- Express (EXPR) +16%
- Bed Bath & Beyond (BBBY^) +92%
The fact that buyers can support two hot sectors tells us the bulls have a lot of fight left in them.
The breakout level of 1900 is likely to serve as support in the coming days.
We expect a bullish reversal if this level is reached. And it could provide an excellent trade opportunity with low risk and high reward.
- The VIX is higher but still trending lower
- RSI levels are all neutral again
- The Put-to-Call Ratio is neutral
Friday is a day for squaring positions. Traders tend to reduce exposure to risk since there could be unfavorable development before trading begins again several days later.
On Mondays, the market has had a chance to reflect on recent news and digest the previous week’s price action.
When the market falls on Friday, and again on Monday, it often acts as a warning system. It’s a signal that bears are ready to pounce.
2022 which clearly belonged to the bears, saw 15 “Down Fridays/Down Mondays.”
Right now, it’s a single piece of information.
A trader’s job is to question their thesis constantly. This morning we remain bullish.
*BBAI on watch
*RVSN support at $1.80
*GNS support at $6
*GAME support at $1.75
*ELYS resistance at $1.50
^AEHR resistance at $37
TRVG support at $1.80
CABA support at $12
NSSC support at $31
^VERI support at $9
LPG support at $21
WNC on watch
DSKE support at $8
CDTX support at $1.60
LPSN support at $16
TWOU support at $12
CBAY support at $8
AI support at $22
SOUN support at $4
TGTX on watch
OI support at $20
TMC resistance at $1.50