Transcription
[Music] Good evening. I'm Peter Res from Shadowtrader.net, and this is the weekend edition. The title of this week's video is, "Is the bottom in?" So we're kind of asking ourselves a question: Was that it, as far as the downdraft, and is the selling over? I have to be honest with you; I don't know the answer to that question. But the whole purpose of these videos is so that we can get together once a week and look at the charts together and try and get a more informed opinion on what's really going on.
So, to that end, we're going to definitely go through the charts of the majors. I have a couple of little nuances I want to show you. We're going to do a little thing called TA101 today, kind of a new segment where I'm going to lay out the case for why the market rallied on Friday. I thought it was all technical rather than news-driven. Um, we're going to be talking about balance areas and look below and fail. This is a good tool that you need to have in your repertoire, so hopefully that'll be helpful to you. We're going to get a little bit deeper into the profile, look at what the um profile distributions are looking like throughout the course of this week. I've got a number one draft picked idea for you, and then we're going to also do a little Fed watch because next week is a Fed week. We've got a meeting on Wednesday of next week where we're going to get an FOMC announcement. So, as we're coming into a Fed week, it's important to do a little bit of a Fed watch.
All right, so all that plus a little bit more in this week's weekend edition. All right, let's kick it off with our weekend review. This is always the starting point for every weekend edition. Remember, we are measuring from Monday's open to Friday's close. That's very, very important. I'm always a big believer; everything has to be open to close. I'm not really interested, like, for instance, on an intraday basis or everyday. I never really look at how things are from the prior day's close. I'm always interested in what's happening from the open because that's the market that's actually playable. Right? That's something you can actually do with the market. It doesn't matter if there's a huge gap and you missed it or whatever. So, marking from Monday's open to yesterday's close, you can see obviously the downdraft is still in play, as far as uh the majors, right? We have here all of them still ended up down, even with Friday's rebound. We still ended up down a good clip, I guess. S&P the worst, 1.16; NASDAQ, uh, about half that; and Russell about uh the same. So those were down, and then sectors were interesting, as usual, continued rotation. I think over the course of this week there was only one short period of time, maybe one day or a portion of a day where we had everything down in terms of sectors. It just continues to be rotational. You can see the financials were the strongest; no big surprise that they're rebounding because they've been strong uh before. Tech ended the week down only marginally because of, you know, all of this was really just of the Friday rally. Everything uh Healthcare was actually down quite a bit. Consumer discretionary got really beat up. Uh, Consumer Staples actually were really beat up, which is interesting because that was one of the strongest sectors that was out there, and energy and utilities had really, really, really uh good weeks um this week, and real estate and materials down a bit for the most part. I think the takeaway here is just to note that the majority of the 11 sectors were still down quite a bit at the end of the week, so there's no major, you know, turnaround really happening yet, or at least we didn't see anything in terms of Friday's activity that was able to take back the losses from the prior 4 days.
All right, moving on here onto the right side, uh bonds have been down just a little bit; a little bit of increase in the yield. VIX obviously collapsed; that mostly happened towards the end of the week as we kind of turned around a little bit, and gold was really the big story, up 3%, and it did hit the 3K number. And if you recall, I've been bullish in these videos on gold for the last few weeks. That trade has been working out well. It's been, to me, one of the easier trades to pull off, either selling puts in SLGC in the Futures contracts or just buying those Futures contracts on pullbacks. For me, at least, that's been lucrative. Um, that's really been one of the easier trades out there, and that's really what you want to do, especially in a tough market like this. You want to find the thing that's working and kind of rinse and repeat that because you know broad Market stuff that's longer than day time frame, we know in this market has been uh quite difficult. Uh, oil was about flat, and Bitcoin ended the week up about 4%, uh, and it's just been its usual uh volatility.
All right, so that's the weekend review, and now let's get into the charts and do a little what's really going on. All right, what's really going on? Let's get into a little bit of TA here, right? And we're going to start from kind of a 30,000-ft view where we're going to be starting with this weekly chart and looking at trend lines, but really the trend lines that are below us. I'm going to get a little deeper into the trend lines above us that are starting to cross as we move down one time frame into a daily. But for right now, I just want to talk about this weekly because I'm still thinking that this trend line should be in play, that we should have come to here, and we did not. And I don't know if that's going to happen, but it's more it's a more bullish sign, I guess. I it's say if we don't get there, right? Because obviously we know what should happen; we should have, at the very least, come to this trend line, and it's a relatively short-term one. We're talking only from April of last year, so it's not, you know, that long. There's a much longer-term support here in the lower uh 5,000 um area. So that's kind of your starting point, I think, with the TA. And then when we move down to the Daily, um here's where things get kind of interesting, is obviously we had the trend line break today, but note that it was the steepest of all them. I' I've drawn these in as like one, two, and three, and only the third has broken. So the steepest trend line has broken, which doesn't mean all that; focus more on the fact that the eight has not been taken yet. You still have a ways to go before you get to the eight, and that's important. The eight, of course, is your green line; that's your eight-period exponential moving average; that's your first Line in the Sand to see if the market can move higher. And remember, if that moving average is going to be in play, it has has to be a confirmed daily close above it in order to say, okay, now the eight has been taken, right? You may move towards it, reject, close below; you may rally through it, but then fall back and still close below, and that's not the same thing. So you want to watch next week to see if there's going to be any sort of a a daily close above the eight, and if so, then I would imagine that's going to put trend line number two into play, right up into here. But that's really the first thing I think that you need to see uh as far as next week in order to give you a little bit more uh confidence that this low is in.
Now, beyond that, we've talked before about lows being bookended by higher lows. So let's say there's a pullback next week. Well, the first thing you want to be watching obviously is probably this level right here, right? Because that's that higher low on the left. You want to see if some sort of a higher low forms there. Obviously, this one has to remain intact, but it would be good if this one wasn't taken out e either, right? So you have some sort of a low that's either equal or higher to this day. That's another little thing that I'm going to be watching for um next week as well.
All right, that's the situation in the S&P. Let's just quickly look at the NASDAQ 100. I don't think it's all that much different, um about the same distance I think from the eight, um little bit more of like kind of congestion looking here, but same thing as far as like trend lines are concerned, right? You want to start start with the most uh, you know, longest term; longest term, which would be all the way here, and then you just grab your tool, and you move to the the ones that are, you know, the next bar down, and if you connect the tops exactly, you get that. So again, the in the uh NASDAQ, I only see these two trend lines here; huge distance away from the 21 here, but still a lot of work to do, and the same exact thing; you want to watch to see is does that uh 21 get uh or that eight rather get taken, and can you close a daily bar above that 8 EMA or not.
All right, and that's basically what's really going on in the charts. So when we get into the next segment, which I'm calling TA101, I'm going to show you uh some nuance that I think will be of help to you, but I'm also going to show you something that is basically leading me to believe that the bottom may not be in, uh, or at least just the fact that I personally was not that impressed with Friday's Advance. If I was a bull, I would not be that impressed, and I'll explain to you exactly why in the next segment.
Okay. A little bit of TA101 for you. To be honest with you, truth be told, this is more like higher-level TA. This is kind of nuance stuff comes to you from the Market Profile Theory, which I'm a huge believer in; works really well, and it just played out so well on Friday that I wanted to talk to you about this pattern so that uh maybe you can use this in your own trading uh at some point. So I've left the ES here on an hourly, and the reason I have it on this hourly is because I want to show the um big balance area here. This is something that's about balance areas, and what's a balance area? A balance area is just basically where you have equal highs and equal lows forming kind of a rectangular area. So basically, you're looking at a price range that kind of looks like this; this is a this is your classic balance area, and when you have a classic balance area, you have something called balance rules, right? And we've talked about this before; it's basically that there's a finite number of outcomes that can happen from the balance area, and that makes sense, right? Because everybody's thinking the balance area is going to break either way. So it either we call that looking above and going; look above and go, meaning it breaks out to the upside and doesn't fall back down; look below and go, so breaks down from the bottom end of the balance and keeps going; or we have look above and fail or look below and fail, and that's where things get really interesting. In this case, we had a classic look below and fail uh during the course of the week, which caused the market to rotate to the opposing end of balance; that's B. That's the rule, which is the most important part of this, is that if you have a look above and fail or a look below and fail, the odds then favor a rotational trade all the way to the other end of balance. And you can see that that's what happened here because this is a look below and fail right on this hourly chart in the ES. Uh, you broke down below balance, but you didn't make, you know, you weren't able to hold those lows; you went back up, and then you you know just basically went right back into balance. You started creeping higher, and this is the regular trading hour session mainly in here; actually, it's more like just this part here um of Friday, and you can see we slowly just crept up to the top end of balance. So this is an important rule I think to know, and you can use it in your trading on almost any type of time frame. Remember, even if you were going down to like five-minute charts and you identified an area where you could box off that you had equal highs and equal lows, you can use the balance rules uh to your benefit.
Now, as I was saying in the last segment, I alluded to the fact that was saying I don't think this rally was all that impressive, and let me give you a couple of reasons why. Firstly, given where we are in the charts, and we just got finished going through the TA, and I'm going to I'm going to switch this to SPY so that there's not any 24-hour action here, but given where we are on the charts and knowing that we've come down quite a ways, right? I mean, we're like somewhere between 10 and 12% off the the highs. I don't remember exactly; we were 10% down uh not that long ago; uh, I think we we just about hit 10%; we'll say, right? I think it's it's different in the NASDAQ, whatever. But regardless, that that that's not really what's an issue is the fact that we've come down quite a ways, and we know that if price is moving lower and making lower lows, the majority of Traders have to be short; it just is that way, right? They are they're basically short the market, and we've had a lot of relief rallies in the middle of this move down that certainly have made the market less short, but the market has continued to make lower lows most of the days, right? Since we started, and so I'm assuming that people are short, and to that end, what I'm thinking is that why I didn't think today was that impressive was two reasons was that one, if if so, uh why wasn't there more; meaning why wasn't it more aggressive? Like I thought we should have rallied all the way to the eight, like boom in one day. Like if if the shorts were really that much more nervous, it should have been that way. And if we go back to the hourly, what I thought was interesting is if you Mouse over here, this this section right here is the day on Friday; this is it basically, right? And again, if you're having day one of a reversal where everybody's short and all the stops are being hit, why did the hourly bars look like this, in the sense that only one of them was an expansion of range; only this one, and why were the rest of them so small? I mean, if you look at it, the entire advance of Friday literally happened in one hour, and the rest of it into the close was this was just this slow dribble higher. So this kind of tells me that the the sellers are still active in some way, kind of fighting against those that are covering shorts. So something to keep in mind here; I want to see a bigger expansion of range to kind of confirm that the sellers are really in trouble and that it changed the tone. And again, I would have thought that we would have gotten that expansion of range because usually the most emotional moves that are the largest happen at the beginning on that first reversal day, right? Like sometimes when we go into Market Profile, which we'll get into a second, we talk about poor structure, and a lot of times that poor structure occurs on the reversal Day, meaning it's like the first day up after a protracted move down, and the reason for that poor structure is simply because a lot of stops are getting hit, right? It's all very aggressive short covering; people are smacking the button at Market to get out of those short positions, and that was what causes poor structure in the profile, such as thin, elongated single prints or and anomalies and things like that, but we didn't really see that at all. You'll see that in the profile today; we didn't really see too much of that. And again, my focus is that these hourly bars to me should have expanded a little bit, and maybe we should have been all the way up to that 8 EMA, and that's obviously going to be our Line in the Sand for next week, as I was saying in the earlier segment; see if we can get up to that eight or not.
Okay. On to a little bit of Market Profile; one of my favorite things to uh talk about. Somebody in my weekly options trading room today asked me if I thought that the profile was a P formation, and a P formation is basically when it looks like a lowercase letter P, and you can see that, and to a degree, I think it is, but usually to have a proper P formation, you want this sort of Base here, this flagpole if you will, to be a single print, skinny uh, you know, run distribution here where there's just just kind of what, you know, single prints, and this was a little bit too filled in for me, but for the most part, it is kind of like a P formation, and a P formation just basically indicates short covering, but again, you usually want to see it on with a a long stick at the bottom going straight up, and that's the short covering, and then it balances out a little bit more um at the top. Um, that being said, I don't see too much in terms of nuance here. I should say I'm not seeing all of the sort of expansion of range and the emotion that I thought I would see on rampant short covering that I was saying should have happened on on day one, right? This should have been the day where everybody was throwing in the towel as the market is all of a sudden going, you know, up instead of down, right? Uh, but we don't see that, right? If you look at the distribution here, you see only one little section of single prints right here, um, and that's about it; just this one little part, and there was very low volume there, so it kind of skipped a couple levels so to speak; it didn't not really, but you know what I mean, like it was just so fast through that area and spent so little time there that there was very little uh volume traded um at that time. Uh, beyond that, we did get a PC migration higher, so that's a little bit more bullish; just the fact that the fairest price to do business where the most amount of contracts traded was near the upper end of the range. We also got a little bit of what we call a spike, and that's when you get single prints in the last period; N period or O period or the last period; N is the last full period; the F last full 30-minute period; the O period is the 15 minutes from 4:00 to 4:15 Eastern. So that means that Spike rules are going to be in play on Monday. What do Spike rules tell us? Us where do we open within the spike, above the spike, or below the spike? The spike is basically just late-day emotional action that does price exploration up to an area sort of in the clear, like out out of range or out of that day's range, like a price exploration uh where it makes the higher the low, and then the idea is that we need to wait for the next trading session, in this case Monday, to see if those higher prices of the spike were validated or if they were just an anomaly. And so basically what we do is we see: Do we open within the spike, which would validate those prices? Do we open above the spike? That validates them even more; that's the most bullish outcome; or if we open below the spike, that negates the spike and tells us that those traders who were kind of bulling it up in that late part of the day were essentially wrong. So we shall see. So Spike rules will definitely be in play.
Um, a little bit more nuance that I'm seeing as well is that the value area did expand to the top of the range. When the value area high like this is right up at the high of the day, that's a little bit more bullish because it tells you that the volume was being committed up towards the top. I think the reason for that, to be honest with you, is because all the volume is here; all the volume is kind of in the upper third of the range, and that was enough to expand the value area all the way up. Just as a quick primer, if you're not 100% familiar with all this stuff, the value area is where roughly 70% of the day's volume traded. The reason it's 70% is because 70% is roughly one standard deviation on either side of the mean, so that's how you calculate the value area. So just a few little nuance things to think about. Value was also breakaway clean to the upside. What do we call what does that mean when it's clean? That means that there's a separation between the two value areas, meaning from the value area of the prior day and uh, you know, the value area uh high of the prior day and the value area low of the current day. That's called a clean break uh to the upside.
All right. Um, as this day was developing, there was definitely a little bit of nuance that was really useful. I always like to point out the taper. This is one of the most powerful things in the profile. Look at how few people traded here at the low of the day early in the session. I mean, almost nothing. This is like the ultimate taper; like a taper is when the four-digit numbers here drop down to three-digit numbers, but this one dropped down to almost nothing. So there's really nobody too interested in in I guess selling the market anymore early in the session. And notice that that also kind of ties in right with the Valley Area High. Remember that the valley areas and all the different references in the profile, it's always referencing the prior day, right? And this is where the power of the profile comes in is that each day prints the distribution and leaves that nuance there of all the different levels, and then what we do is we watch the next day to use all those key levels as signposts to see if those levels are being tested, traded through, etc., etc. This is where the profile really shines. So it's not just a tool for futures day Traders; it really has a lot of import on how you can look at the markets in the longer term.
Um, on top of that, one last thing was I found it interesting how much how long it took, you know, each one of these letters is a 30-minute period; it's B period, C period, and D period. I found it interesting that it took so much time just to get out of range, right? In range means within the prior day's high low; that's called in R. Range is basically referencing the prior day; out of range is is outside of that, and the RTH high, which is regular trading hour session high of the prior day, was 5604, and look at how much time was spent below it; was B period, C period, D period, and then finally in that D period, it broke out of range. But if you watching um Friday's action closely, I think you would agree that it was not that easy of a morning to just look at it and say, okay, I'm definitely going to sell some puts below, or I'm definitely going long here. I mean, I was thinking the same thing, but it was really nerve-wracking because the market just wouldn't get out of range, right? Those of you who recall, if you're watching closely, we just kind of s up in that 5590 to 5600 area, and it just would not break. So that was kind of leading me to believe like, okay, yes, maybe some sort of a reversal is underway, but where are the buyers? Like, why are they not stepping up? And then it was only after that that we got a larger surge to the upside, that D period, E Period, whatever, in that hour, and as I was saying earlier when we were looking at the Candlestick charts, that was the entire advance of the day really, right? The rest of it didn't do a whole lot; the other uh four or five hours after that really was not really too much of an advance.
So that's the situation, I think, uh profile-wise. Obviously, this is something I monitor uh very, very closely every single day. Little reminder: Check this out right here at the bottom of the screen: Shadowtrader.net PPP. If you're interested in this sort of analysis and using the profile of your day, I write a report and a little 3- to 5-minute video every single morning uh called Peter's Pre-Market Perspective. It's super inexpensive; I put this out for 20 bucks a month. You can also take a one-week free trial on our site right at that same link, uh PPP at the shadowtrader.net site. I think it's like super useful, and this is really uh, you know, because I'm so passionate about this material uh and I just want everybody to sort of get my IDs in the morning. I've always kept this at a super duper low price; it's basically a buck a day, and uh I think it's pretty indispensable uh information. I always go over what the profile did the day before, how I think it's going to play out in the current day, and all the little nuance and signposts and things you need to be looking for uh to start your day off on the right foot.
All right. Time now for our number one draft pick. This is where I leave you with a strong stock idea for next week that could be in play uh either next week or for a while after that. This one is AMD, the chip company. This came to me from one of uh subscribers in my weekly options room, and I thought it was kind of interesting. So, starting on the longer time frame, which would be the weekly, we see that there is some support here in the low 90s area; the this is what we call a major support actually because it precedes a higher high, right? A minor support would be one if it supported here and sort of went to here and fell, and that would be a lower high than here. So this is a major support because it precedes a higher high, and the Stock's been um, you know, didn't have the greatest 2024, and 2025 has kind of continued on that phase. But if you look at the daily, what I find interesting and the reason I thought this might be worthwhile to go over is that this stock actually stopped going down long before the market stopped going down, right? Look at this balance area; how it's just been going sideways, and Friday it just started to lift a little bit, and I think there's definitely some upside here, and also you can have a relatively tight stop. I mean, this move down here is 94, is so you're risking about five bucks, but you'd definitely be looking to make about say at least three times that; you should be looking at least a move to about 115, right? That's where this this resistance comes in right here at about the 115. So it's about a 3-to-1 risk reward, and if you look at how things have been going in the stock for so long, if you switch back to the weekly, what I did here is I put the anchored VWAP from the top; you can see here it's this little purplish line here, and you can see this is the volume-weighted average price is actually here. And don't get me wrong; that's bearish when you're that far away from it, but it also tells me the price has a good chance of retracing a good amount of this move, right? Is that the value uh, you know, the volume-weighted average price is actually much, much higher, and usually over time prices get pulled back to that, and obviously I'm not calling for that; that would literally be a 50% move from here. But I mean, if the market turns and you know people start getting more animal spirits and looking to be buying stocks, this could be something that could start start to move. Obviously, you can see on the weekly charts on this time frame, if you mark off moves here, they can be pretty large. I mean, this is like 140ish to like 190; that's a 50-point move. This one here is 12 125 up to 17; that's another 50-point move. So it's not really that much to ask to at some point come come to Trend, and maybe you see that that anchored VWAP in the 150 area. But obviously, this is a weekly time frame; that would take a very long time, and you're probably going to have to get some buy-in from the broad Market itself, right? So you don't want to be uh, you know, just assuming this is going to do it if the broad Market continues to be bearish. But anyway, that's the number one draft pick for this week uh which is AMD.
Okay. Time now for a Fed watch because we've got a meeting coming up next week, which is Wednesday, March 19th, and as you can see here, the probabilities of any change are next to nothing; that means that there will be no policy change. We are currently at the 4 and A4 to 4 and A2 range, and there's only a 1% chance that we're actually going to go down. So they are not going to do anything. Uh, obviously, the bigger story is usually the press conference and how the words that are spoken get parsed by the market, you know, in terms of whether or not there are Clues as to what Fed policy is going to be moving forward. But regardless, as far as the actual meeting or the movement in rates, there won't be any. Now, that being said, we should already be looking forward to May and the other meetings here to see if there's going to be cuts down the line; what the market may be pricing in, and here where I think things get interesting because the next meeting is here on May 7th, and there is only a 25% chance that we cut in that meeting. But what I think is really noteworthy about this is that the odds of that actually went down this week, even though we had a CPI print that was very benign, right? In the mid part of the week, if you recall that Consumer Price Index came in lower, indicating that inflation is a little bit more under control, but the market doesn't seem to believe that. Obviously, it's probably going to be some tariff-related uh increases in price down the pike, so maybe the market is probably smarter than that; not looking for any sort of a meaningful pullback in prices anytime soon, and the market responded in kind, or I should say the FED funds rate Futures here responding in kind, and you can see that it actually went down, and you know that because you've got here like one day ago, one week ago, and you can see here the the 400 to 425 a week ago; it was a 36.2% chance, and then a day ago was 34, and now it's dropped only down to 25. So it's not looking very good as of yet in terms of a cut. We can switch to the June meeting now, and then you get a little bit more odds, right? By the time summer rolls around, now the odds are greater rather than lesser that we actually get a cut of that quarter uh percent and about an 18% chance that we move down two levels or a half of 1% down to 375 to 4. So we shall see. All right. But obviously, what's on our plate now is just what's going to happen on March 19th, and as we can see here, probably nothing. But of course, we'll be listening closely to what Mr. Powell has to say and what goes on in the all-important press conference.
And as always, our last segment is always what we call looking ahead so that everybody can have a good idea of what's coming on down the pipe in terms of economic data and earnings releases. Obviously, the earnings uh season has kind of come to a close, so stuff is still dribbling in, and as I always like to remind people, I only talk about earnings that are going to be important to the market or something that I think is going to be playable from my perspective, and also economic data that is of high impact only. So uh given that we've got some activity early in the week with retail sales; all this stuff is basically high impact; could move the market; building permits and housing starts as well. Obviously, the biggest news on the economic front is the FOMC announcement, which is going to be on Wednesday. Thursday is always a day when there's employment data; that's always on Thursday, so initial claims and existing home sales are also coming on Thursday; that's also quite uh important. Now, as far as earnings are concerned, not too many again, but a couple biggies: Five Below in the retail space; uh, FedEx is going to be pretty important; Lennar is in the Home Building space; Micron is in the chip space; that could of course affect the AMD trade; AMD is not reporting until May, but with the Micron earnings, that could push semiconductor stocks in either direction, so be aware of that if you're thinking about taking some shares long in that AMD that we talked about; and Nike is also going to be uh reporting, and that one could be interesting because that stock has has been beaten down for a while; had a little bit of a rally on the Kim Kardashian news on that that partnership going on with Skims, and since then has just kind of fallen apart again. So really buyers are just don't seem to be all that interested. So we'll see what they come out with in the earning support; who knows; we'll see. But if they come up with some positive news and the market seems to like it, maybe the stock starts to get more of a definitive turnaround than what it's had happen. And Carnival Cruise Lines uh is also on Friday, and just mentioned that because those stocks can be pretty volatile, and they can Gap a decent amount, and we'll see what can happen there; could be a playable move uh in Carnival. But that basically is the looking ahead for the week of uh March 17th to March 21st.
And that's my show for this week. Thank you so much for spending a little bit of time with me. Quick reminder: The new studio is coming. As I was saying, it's going to take us a little bit of time; I put it probably another month out, maybe at most, but I am so excited about it, and this show is literally going to be taken to the stratosphere. Um, if you like the old setup with the two TVs, wait till you see what I've got cooking in the new studio; I think you're going to really uh be impressed. It's going to be an amazing show once we get back uh into the studio.
So to recap a little bit of what we talked about in terms of the TA and everything: Is the bottom in? I don't know. Number one: I thought the Advance on Friday was a little bit lackluster; I expected a little bit more in terms of short covering; I thought that the shorts would have been a little bit more panicked than they were on Friday. Number two: We have not yet closed a bar above that 8-period moving average; that 8 EMA; that's my first Line in the Sand. Number three: We have broken only the most steepest trend line, and none of the other trend lines above us; that's Point number three. We would have to, you know, go sideways some more and stay above at least that steepest trend line in order to tell us that some sort of change is underfoot. So I would be taking this Market one day at a time at this point. I think everybody feels the same way in the sense that we are one headline away from another down day, right? From a another larger Dow draft. Do we get a leg