Pushing Higher After Testing Lows

by | Jul 31, 2024

Pushing Higher After Testing Lows

Yesterday the market was broadly down, we saw tickers from tech to telecom slumping and forcing the S&P and Nasdaq lower.

Today, we are seeing the markets up broadly with the tech sector soaring over 3.3% by midday alone.

If you have been following my updates for the last week you’ve probably grown tired of hearing me (or reading me) say “No Man’s Land” between the lows from last Thursday and the initial gap down the week prior…

Well, yesterday (especially immediately post-market) put those areas to the test with a big push down beyond the lows.

This is the moment I’ve been waiting to see: Whether we’d break down to a deeper correction or if the buyers would step in at the lows and force this thing back up.

Here’s what it looked like…

As you can see over the last few days on the QQQ (Nasdaq 100 index), buyers flooded back in and bought the dip in pre-market trading even before markets opened this morning.

It feels like buyers don’t want to let the market correct any deeper right now…

Granted, we’re just looking at a single day of trading, but this feels like the first piece of a bullish puzzle coming into play.

I’d now put the odds that this is a minor correction and we’re headed back up at 60% or so compared to the total 50/50 coin flip I would have given you last week.

And I think we’ll get a few more pieces to this puzzle very soon!

More earnings are hitting the tape the next couple of days with Meta’s (META) being a huge one to watch today. They’re scheduled for 5 pm Eastern time 1 hour after close.

As of now, the Magnificent 7 — Microsoft (MSFT) , Apple (AAPL , Google (GOOG), Amazon (AMZN), Nvidia (NVDA), Meta (META), and Tesla (TSLA) — are setting up for a serious continuation after going all the way to the lows less than 24 hours ago.

Meta’s reaction today has a chance to put this continuation into hyperdrive or stop it in its tracks so I’ll be very curious to see both how they perform, but more so how the market responds to the release… whether good or bad.

If they perform well and the stock gets punished, then we have a clear sign that sentiment, especially around tech, is still down.

On the flip side, if META is somewhere around the “OK” benchmark and investors rush to buy up shares (which is fairly common with a stock like META that has taken a recent pullback), we could see optimism back in full swing.

Let’s watch and see…

— Nate Tucci

P.S. One benefit of this up move is that it puts us in play for another Automated Option trade this Friday! We’ve avoided the last two weeks due to bearish conditions and been on the sidelines, but we’re ready to pounce if the market cooperates.

We’re 10 for 11 trades in the service and I am looking for our next one, so be sure to join us before it triggers!

What to read next