Pristine Market Analysis & Watchlist 2/23

No-Man's Land!

Team,

I love the knowledge sharing that is happening in our community. Thank you to our original members that are sharing their best practices with newcomers! When you teach someone else, it helps solidify the concepts in your own mind.

Only three trading sessions left in the second inning! We’re all going to make it!

-Andrew

---

Today was a highly emotional trading session with multiple shakeouts! When we are in the fog of war, sometimes it’s difficult to pick out the signal from the noise. Let’s dissect today’s action now that we are a few hours removed☟

Economic Data

Initial jobless claims came out slightly lighter than analyst estimates, and the bond market flipped from deep red in the morning to a green finish! Not bad👍

While this sounds great, when we zoom out on the ZN_F 10yr treasury futures contract, I still don’t see much to be excited about. As of now we are just retesting the 5-day EMA. We have to remember that retests of the 5-day EMA happen all the time in the most bullish of trends, and the most bearish of trends.

ZN_F Daily Candles

The DXY dollar index didn’t rip higher, which is great, but it still finished with a green candle. Do we interpret this as glass half-empty or glass half-full?

Equity Dashboard

Volatility was crushed and equities rallied.

SPY Price Action Analysis

The S&P 500 topped on Feb 2nd, and has been stair-stepping lower in a narrow channel ever since. We undercut the 50-day SMA and tested the bottom of the trend channel! The short-term trend is down, but the risk/reward of shorting the bottom of a trend channel is not great.

• Heading into the week, the options market implied a 2/28 SPY close between 398.24 and 415.76. Well guess what? We are already trading down to the market implied downside target with three trading sessions left to spare.

• It is great that the market held the 50-day SMA, but we have to remember that we are still trading below the 20-day SMA, and the 5-day EMA! We haven’t reclaimed any key levels!

Return on Vol Crush

In the past two days, the VIX has declined meaningfully, but it hasn’t translated to much in the way of SPY gains. Volatility declines often fuel equity rallies, so if the market can’t rally when volatility is being crushed, that’s a yellow flag!

Finviz Heatmap

NVDA provided a great lift for the market today as it rallied +14.02% after reporting earnings. Will NVDA advance another 14% tomorrow? Probably not. We need other names to support the market as well.

Beware the Jaws

While it’s tough to believe that the market could have more room to fall after the recent selling, the jaws setup between the Nasdaq and the 10yr treasury futures contract is still in play! A convergence here implies further downside for technology stocks.

So what’s the plan?

---

In the following sections of tonight’s update, I’ll cover my research in preparation for tomorrow’s trading session

✅ Trend Model Update - Our proprietary indicator that informs us on how aggressive/defensive to position in the market

✅Market Strategy - My trading plan

✅ Today’s Trade Blotter and Position Update

✅Daily Watchlist - We scan thousands of stocks and hand-pick the best reward/risk opportunities