The SPX bounced today following oversold conditions and the indecisive price action (daily doji) observed yesterday. The bearish target for the week at 7,642.7 was breached, and then, the Central Daily Level that was modeled yesterday to consider bullish or bearish momentum was smoothly reclaimed today at the open. The SP500 opened below 7,635.4 and steadily gained upside momentum, moving toward the next bullish target of 7,659 before approaching with 7,681 to the next modeled level of 7,687. Price action printed a technical bounce, but tomorrow we will see how sustainable this move is by holding tomorrow’s central daily level (CDL and posted below), especially given that today’s rejection occurred right at a key monthly level for September. The SP500 still has work to do to sustain a push higher.
The bounce today was also aided by a tag of the 7,638 annual zone highlighted last night, which represents a normal consolidation area before any potential bearish continuation.
On the macro side, the ADP National Employment Report showed private employers added 38,000 jobs in August, falling short of the 47,000 estimate. This cooled expectations of aggressive upcoming interest rate hikes. Anyway, the probability of a rate hike at the upcoming September Fed meeting remains at 62%. That probability is still elevated; it simply ticked down a few percentage points from yesterday’s peak of 67%.
Today, technology was muted, with the tech ETF (XLK) closing flat at +0.02%. Instead, financials, communication services, materials, healthcare, and energy drove the bounce across the S&P. Tomorrow, the market may struggle again given the relative weakness in tech, with the NDX gaining a marginal +0.23% gain today. The semiconductor sector gained 0.96%, led by MU and NVDA. We have to see tomorrow what is the actual move for Broadcom (AVGO), which so far is dropping -1.6% following its earnings report. The daily levels for AVGO are below to manage price action tomorrow.
On Saturday I described the bullish case for META, AAPL was a high probable bullish setup, and the bullish case for TSLA was documented. Tomorrow will be crucial to assess if momentum continues given that the bullish levels for the week were reached with indecision in daily and 4H timeframes. MSFT on the other hand is falling -3% this week, consistent with the main bearish condition described in the Weekly Compass. AMZN on the other hand breached its central weekly level against expectations, but once again, it printed daily indecision at the 50DMA, its set of levels is also below in case that a bounce occurs as considered.
Today, we will review the status of several high-probability setups highlighted in the Weekly Compass. One of them is NFLX, which continues to bounce, gaining 15% since the bullish call a couple of weeks ago. That setup arrived right as the stock sold off during earnings, when I shared educational content with paid subscribers on managing overextended moves using a specific short term timeframe.
The divergence is intriguing for this week: The SPX and IWM were bearish for the week, while some tech giants were forming bouncing setups. That’s investing and trading, you must be neutral when analyzing each ticker.
Today, I will cover the charts with fundamental metrics designed to help long-term investors evaluate emerging opportunities over the coming weeks, particularly given the seasonal volatility that typically accompanies this month. As illustrated in the Weekly Compass last Saturday, September is the weakest month of the year, and that seasonality intensifies during midterm years based on 40-year historical patterns.
Today’s Agenda:
Fundamental and Technical Patterns Combined for MSFT, AAPL, NFLX, MU, AMD, TSLA
Daily Plan for SPX, ES=F
Daily Combined Levels for SPX, ES=F, all the magnificent seven, and AVGO.
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Let’s begin.
Combining Fundamental Metrics and Technical Analysis
This approach helps to determine longer term opportunities, let’s begin with MSFT: