Nailed the Top: 7,620 Reached and Overheated Conditions Validated
Bullish Target Cleared. Now, the Confluence Zones Favor the Bears. Indicators to Navigate the Week
U.S. equities closed the first week of June with steep losses as a stalled technology rally and rising interest rate expectations pressured the market. A much stronger than expected May labor report triggered the reversal from overbought levels called during the recent days (and reinforced on Thursday afternoon to paid subscribers). The U.S. economy added 172,000 jobs last month, far above forecasts of 85,000. The unemployment rate held at 4.3%, and upward revisions to March and April added another 93,000 jobs. The data erased expectations for near-term rate cuts. Investors sold government bonds aggressively, pushing Treasury yields higher and strengthening the dollar. Markets are now fully pricing a quarter-point rate increase by year-end under new Federal Reserve Chair Kevin Warsh.
Higher energy costs and rising borrowing rates triggered a sharp rotation out of A.I. Sectors told a risk-off story during the week. Money leaned during the week toward energy (XLE +2.5%), healthcare (XLV +2.4%) and real estate (XLRE +1.6%), a defensive and value tilt rather than a chase for high-beta growth. Healthcare is testing monthly resistance near 153.0 with indecision, and real estate recovered both its weekly and monthly lines ($44). Meanwhile technology (XLK -5.6%) and discretionary (XLY -5.0% ) lost both their central weekly and central monthly levels, a major reversal sign triggered between January and February of this year ahead of March selloff. Communications followed in the ranking of weekly losers (XLC -3.5%).
This Reversal was Expected
The stock market has been in overheated conditions during the last two weeks, however, the market was fueled by geopolitical optimism and our key annual target had not been reached. On Wednesday, I wrote in the market update that my $7,638 target could be considered reached after the $7,620 weekly mark had been touched on Tuesday. $7,638 has been in my charts since the beginning of the year, and was updated as bullish target a month ago considering a specific weekly setup action studied for paid subscribers. The thesis is being validated 🎯.
When I establish a target for a weekly, monthly, or annual timeframe, I rely strictly on: 1) Technical indicators (and overbought conditions were flagged in the weekly chart, much more reliable than daily conditions), 2) price action patterns (Recent indecision at the highs), and 3) support and resistance levels modeled well ahead of price action.
The accuracy includes individual names, over a month ago I highlighted 317 as the bullish target for AAPL, the recent high before printing the current weekly shooting star pattern was 316.9.
My charts include annual levels that you see consistently week by week, paid subscribers saw the rejection that NVDA suffered at the 239 zone 🎯, not to mention the precision this week for SMH, reversing at 642, the same annual level 🎯.
Are annual levels hard resistance always? no, they aren’t, for that reason I highlight the relevance when it applies, and these cases involved overheated conditions considering my set of technical indicators that is transparently explained in every publication for each chart, making the content insightful and educational like no other.
🎯 The setups highlighted last weekend with high probability included bearish reversals for AAPL, SMH, IWM, and AMD, a bullish reversal for VXX, and bullish setups for MSFT and PLTR, which moved to their targets on Monday before sharp reversals (highlighting the importance of having S/R levels calculated in advance to set targets). That is a total of 7 setups with the correct direction 🎯 and 2 setups that did not deliver the bullish expectation: META and GLD. Their respective references to set stop losses and protect capital were 0.6% and 0.9% below the price.
In total, 7 of 9 or 77% of the setups highlighted were correct. The gain of the accurate setups averaged 4% including bullish and bearish targets. 🎯
Are you always following SPX, NDX, GLD, NVDA, TSLA or other securities? Good news for you, their setups are ALWAYS studied with targets and invalidation levels in every publication, I just highlight some setups for reasons described for each case.
Subscribe to get immediate access to our comprehensive analysis of the US indices, the Magnificent Seven, Bitcoin, core ETFs like SPY, QQQ, IWM, SMH, and GLD, and key mega-caps. All setups are summarized into a clear blueprint featuring structural bullish or bearish probabilities, precise price targets, and the exact levels needed to protect your capital. Charts included for further transparency of the considerations.
Today’s Agenda:
SPX and Market Context: Includes Volatility, Breadth, NDX, DJI, SMH, IWM, Crypto.
Heat Rank (New Feature): All the securities in our watchlist ranked from overbought to oversold conditions.
Deep Dive (charts) into Individual Names: AAPL, MSFT, GOOG, TSLA, NVDA, META, AMZN, AMD, WMT, LLY, BRK.B, and GLD.
Setups Blueprint: Bullish/bearish conditions for each name, price target, risk control price for the watchlist, included the ones listed above, and also NFLX, PLTR, V, AVGO, XOM, VXX, and more.
Let’s begin with our core index,