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Good Wednesday morning!
Someone poked the bear yesterday....and their names were Jensen Huang of NVDA and Craig Moffett of Moffett Nathanson!
The other night at the CES (Consumer Electronic Show) in Vegas, NVDA CEO Jensen Huang gave a glowing presentation of everything AI....robots, personal computers and of course self-driving cars! On the back of this wonderful, giddy presentation, NVDA shares skyrocketed to new all time highs and people bought the stock like it was something brand new and unheard of before! Well, like sheep to slaughter, this was the quintessential "buy the rumor sell the news" event and the stock got whacked!
On the other hand, Craig Moffett, from research firm Moffett Nathanson, actually for the first time in his career, DOWNGRADED AAPL!!! (BIG HUGE GASP!!) "How dare he do such a thing?!?!" "It's AAPL for Pete's sake?!?!"
Well in my opinion, someone had the guts and finally came to their senses and made a 100% legitimate call (again, of course in my humble, but accurate opinion,) and it's about freaking time!
Anyway, the point is that things have just been getting too frothy and the drop wasn't necessarily just because of Jensen and Craig! I have been mentioning this for a while, that you must be careful up at these levels, and these two events, I believe, has caused some traders and investors to sell and lock in some huge gains in their very profitable positions. It also reminds people that the market does not go up forever! I guess it was the straw(s) that broke the camels back!
Now I am not saying they are dumping everything, and the top is in, but yesterdays price action confirmed this to me, especially in NVDA and AAPL. Now please note, smart money has been selling AAPL from over a week ago, which started back on the 27th of December, and it was the outstanding call from Craig that woke more people up! We will see what happens today.
Unlike Monday where upper targets were hit, lower targets were hit yesterday and the gap was filled back to Friday's high @ 5997. Something else we mentioned to be on the lookout for prior to the opening bell! And lastly, the market could not recapture any of the large down move, closing near the lows of the day. This is quite bearish.
Right now futures are slightly lower higher on overnight inventory that is mixed. We are also in the lower third of prior day's range and this is also bearish. In the target levels and profile pic below, ANY price action that stays below the bottom of the spike @ 6008 is edge to the bears. If buyers do take it back above 6008. then price could get up to 6021-6025. Now if price cannot even get back above the overnight high @ 5976 then it is even more bearish. If lower targets are taken out, then look for further downside to 5870-5866. Futures are trading @ 5958 at the time of this writing.
**Before I go, please note: The market is closed tomorrow in remembrance of the passing of President Jimmy Carter, so there will be no MC tomorrow. We will be back Friday.
VPOC Update: No new VPOC was added yesterday, however the closest one below @ 5987.50 was taken out on the big move lower, so we still have 4 above and back to 27 below current price with the closest one @ 5870 which is obviously close to that 5866 level we have been mentioning.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 6000 - 6010
Key Levels: 5955 POC then overnight high 5976
downside target is: 5915 - 5905
/NQ upside target is: 21,590 - 21,625
Key Level: 21,450 POC & overnight high
downside target is : 21,175 - 21,150
/RTY upside target is: 2290 - 2298
downside target is: 2250 - 2240
Economic Data:
MBA Mortgage Applications @ 7:00 AM ET
ADP Employment Report @ 8:15 AM ET
Christopher Waller Speaks @ 8:30 AM ET
EIA Petroleum Status Report @ 10:30 AM ET
Treasury Buyback Announcement (Preliminary) @ 11:00 AM ET
4-Month Bill Auction @ 11:30 AM ET
EIA Natural Gas Report @ 12:00 PM ET
FOMC Minutes @ 2:00 PM ET
Consumer Credit @ 3:00 PM ET
More Color....... By Analyst Rich Rickus
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ES - Key Demand at $5866 then at $5909 with Supply at $5995 then at $6040-50
Bearish
Buyers trapped below $5909 after a pullback below $5900 looking to play SHORT targeting $5880 then $5866
Bullish
Sellers trapped above $5995 after a break and retest above $6000 playing LONG targeting $6040 then $6065
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SPY - Demand at $585-584 with Supply at $593-592
Bullish
Sellers trapped above $593 after a break and retest from $594 targeting $595 then $596
Bearish
Buyers trapped below $593 after a retest from $592 targeting $590 then breakdown into $589
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/NQ - Key Demand at $21300 -21350 with Supply above at $21550-21500
Bullish
Sellers trapped above 21550 looking to play long after a pullback holds above $21550-55 targeting $21700 then $21750
Bearish
Buyers trapped below $21500 looking to play SHORT after a pullback holds below $21475 targeting $21400 then $21300
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QQQ - Key Demand at $514 with Supply above at $518-519
Bullish
Sellers trapped above $519 looking to play long from a break and retest at $520 targeting high $522s then a breakout into $523s
Bearish
Buyers trapped below $518 after a break and retest below $517 looking to play short targeting $519 then mid high $518s
Have a great day!
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