After five down days, the stock market showed signs of stabilization today with a much-needed market bounce. The QQQ, SPY, and IWM all saw green, offering hope that support levels are holding strong. While the broader indexes faded slightly into the close, speculative sectors like crypto stocks and nuclear energy staged impressive comebacks.
This shift marks the reemergence of risk appetite, particularly in midcaps, small caps, and high-flying names. Despite the late-day fade, today’s action was a positive signal for traders.
Index Breakdown: Stability Amid Volatility
- SPY:
The SPY retested its election breakout zone, coinciding with its 20 SMA. This “bone zone” between the 9 EMA and 20 EMA provides a key layer of demand. If the market holds these levels, expect a gap-fill attempt in the days ahead. - QQQ:
The Nasdaq’s QQQ followed a similar trajectory, dipping into its gap-fill zone and testing support at the 9 EMA. A move over Friday’s high could trigger aggressive buying and further push into the gap. - IWM:
The Russell 2000 saw a flat day but showed promise with speculative small-cap names regaining momentum. Holding these levels will be crucial for the IWM to maintain its bullish structure.
Day Trading Watchlist for Tomorrow
- SYM (Symbotic Inc.):
- Catalyst: Earnings breakout after hours with 30% move.
- Plan: Watch for an ORB (Opening Range Break) or quick pullback setup.
- MSTR (MicroStrategy):
- ATR Expansion: Huge moves today, reaching $388. Red-to-green or pullback to VWAP offers opportunities.
- COIN (Coinbase):
- Breakout Potential: A break of $330 targets $370 and potentially $400.
- Setup: Use pullbacks into VWAP for entries.
- ALAB
- Setup: Multi-day pullback with a remount of the 9 EMA. Swing trade potential above $100.
- AFRM (Affirm Holdings):
- Breakout Setup: Cleared multi-year resistance levels around $55.
- Plan: Day trade opportunities remain; swing entry was two days ago.
- NNE
- Catalyst: Nuclear sector momentum, bolstered by Ken Griffin’s commentary.
- Plan: Watch for a break over $26 for continuation.
- SQ (Block Inc.):
- Setup: Pullback into the 9 EMA. Look for a $100 breakout level.
- HOOD (Robinhood):
- Upgrade Catalyst: Received $40 price target from Needham. Flag breakout in progress.
- SE (Sea Limited):
- Earnings Runner: Bounce off breakout level with $120 in the cards.
- AAOI
- Setup: Resistance at $29.25 remains critical. Look for a break to confirm momentum.
- DOCS
- Earnings Pullback: Testing the 20 SMA after a strong move. Swing potential on green candle confirmation.
- LUMN (Lumen Technologies):
- Reversal Setup: Testing prior breakout levels. A weak open could provide a low-risk entry.
Key Trading Insights
- Speculation Rebounds: Risk appetite is back as midcaps and small caps show renewed strength in this market bounce
- Sector Focus: Crypto stocks, nuclear energy, and earnings plays dominate.
- Pullback Opportunities: Use pullbacks into the “bone zone” for high-probability trades, especially on leading stocks.
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