Market Overview: Is a Bounce Coming or Deeper Pullback Ahead?
The stock market had a volatile week, with sharp pullbacks across major indices. The QQQ and SPY experienced orderly declines, but Friday’s selloff of 2.5% raised concerns about deeper structural issues. Similarly, the IWM, after a promising breakout, is now testing key support levels.
While some pullback was expected given the extended rally post-election, the magnitude of Friday’s decline was notable. Key levels for a potential bounce are approaching, particularly with QQQ at its 9-EMA and SPY near the 20-SMA. A weak open tomorrow could trigger oversold conditions, making this a critical day to watch for potential reversals or breakdowns.
Earnings News Driving the Market
Earnings continue to provide significant catalysts. Companies like Tesla, NVIDIA, and COIN remain in focus, alongside key developments such as the easing of rules for autonomous vehicles. These news-driven plays offer excellent opportunities for both day and swing trades.
Key Market Levels to Watch
- QQQ: Testing its 9-EMA. A weak open could set the stage for a bounce.
- SPY: Approaching the 20-SMA after a sharper pullback. Watch for further backfilling to build a base.
- IWM: Critical retest of breakout levels. Holding the 20-SMA is key for continued bullish momentum.
Top Stocks to Watch Tomorrow
1. NVIDIA (NVDA):
With recent concerns about AI and customer bottlenecks, NVIDIA faces key resistance at $500. Watch for a potential breakout or failure at this level.
2. Tesla (TSLA):
News about eased autonomous vehicle regulations could drive interest. After a pullback to $300, Tesla is primed for a potential bounce. Keep an eye on this for tomorrow Trump team plans to ease U.S. rules for self-driving cars in boost for Tesla: report
3. COIN (Coinbase):
COIN filled its recent gap and displayed strong relative strength into Friday’s close. A break above $330 could signal a continuation of its recent rally.
4. Upstart (UPST):
After a strong post-earnings run, UPST pulled back to its 9-EMA. A break above $70 could reignite momentum.
5. Luminar (LUNR):
With interest in space robotics growing, Luminar’s pullback to its 9-EMA sets it up for a potential breakout above $11.
Risk Management Tips
- Avoid Chasing: Extended stocks can lead to significant pullbacks. Look for orderly consolidations and pullbacks to key support levels.
- Focus on Catalysts: Prioritize earnings and news-driven plays for higher volatility and cleaner setups.
- Prepare for Both Directions: Markets may gap down or up tomorrow. Be prepared to react to either scenario with defined risk parameters.
Conclusion
While the market pullback raises questions about the sustainability of recent gains, key support levels suggest a bounce could be on the horizon. Watch for weak opens and oversold conditions to capitalize on opportunities. Stocks like NVIDIA, Tesla, and COIN remain in focus for tomorrow’s session. As always, maintain disciplined risk management to navigate this volatile environment effectively.
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