⚠️ Record Highs, Tech Weakness — Fed Minutes Year-End Market Test | LIVE Trading Dec 29

Key Concepts

• Market Volatility & Range-Bound Trading: The market exhibited range-bound behavior with a generally bearish undertone, particularly in tech and chip stocks.
• Technical Analysis Dominance: Trading decisions were heavily influenced by technical indicators like VWAP, moving averages, and trendlines.
• Active Position Management: Traders actively managed positions, setting stops, taking profits, and adjusting strategies based on real-time price action and news.
• Sector Rotation & Theme Identification: Analysis focused on identifying relative strength and weakness across sectors (energy, tech, etc.) and potential investment themes (space exploration, cybersecurity).
• Risk Management Emphasis: A strong emphasis was placed on limiting risk through position sizing, stop-loss orders, and utilizing funded trading platforms like “Trade the Pool.”

Market Overview & Initial Conditions (Parts 1 & 2)

The week began with a slightly negative market sentiment, with the ENQ down ~0.5%, ES ~0.25%, Dow 0.11%, and Russell 2000 0.33%. Oil bucked the trend, rising ~2.5% due to geopolitical developments (Zelenskyy-Trump meeting). Gold and silver experienced a pullback after recent all-time highs, while Bitcoin traded within a $88,000 - $92,000 range. Key headlines included the Coupa data breach (impacting 34 million users, with $1.17 billion in compensation), testing of Wemo autonomous vehicles in London, and Amazon drone delivery updates in Italy. Digital Bridge (DBRG) was halted for acquisition by SoftBank at $16/share. The CME increased silver margin requirements to $25,000/contract to curb excessive leverage. A proxy fight was initiated by Lululemon (LULU) founder Chip Wilson to reshape the board. Concerns arose regarding Tesla Cybertruck demand, leading to a 99% reduction in a cathode supply contract with LNF, potentially linked to the Inflation Reduction Act and subsidy changes.

Intraday Trading & Market Reactions (Parts 3 & 4)

The market open was described as a “right turn down,” with AMD and Nvidia leading the decline. Traders focused on identifying and exploiting short-term imbalances using VWAP and prior day’s levels. Several trades were executed, including shorting Tesla (TSLA) at $467 and TQQs, and taking a long position in Silver (SLV) after a trend break. Breaking news regarding potential cooperation between Israel’s Netanyahu and Tesla’s Elon Musk briefly impacted TSLA. Pending Home Sales data exceeded expectations, rising 3.3% month-over-month. NEM downgraded price targets for Coinbase (from $400 to $290), Robinhood (from $145 to $135), and Gemini (from $35 to $23). Silver (SLV) experienced a significant decline (9-10%), becoming a strong short candidate. Alibaba (BABA) showed relative strength and attempted a bounce off VWAP. Tesla (TSLA) faced resistance around $500 and potential support around $475. Nvidia (NVDA) was considered a stronger play than AMD, with the latter potentially offering a short opportunity below $216.

Late-Day Analysis & Emerging Themes (Part 5)

The market remained range-bound, with the NASDAQ holding the low of the day. Meta was flat, while Microsoft traded below $500. The US Dollar (DXY) continued a downtrend from a double top formed in November, trading between 97.9 and 98.1. The CI Fed Watch tool indicated an 81.2% probability of a rate hold at the January FOMC meeting. Marathon Digital (MARA), below $10, was considered a potential buying opportunity. IB (IBIT) broke a trendline, prompting a short position. Micron (MU) showed relative strength, bouncing off VWAP. Oaklo (OLO) was deemed weak, potentially breaking below the 200-period moving average. SMR had previously broken the 200-period moving average. Soapa experienced a significant gain (65%), while Mask rose 35% (on a $25 stock).

Conclusion

The trading session highlighted the importance of adaptability, technical analysis, and disciplined risk management in navigating a volatile market. While initial conditions suggested a slightly negative bias, traders actively identified and exploited intraday opportunities across various asset classes, adjusting their strategies based on real-time price action and news flow. The emphasis on VWAP, moving averages, and trendlines, coupled with a cautious approach to market narratives, underscored a data-driven trading philosophy. The promotion of “Trade the Pool” reflected a growing trend towards limited-risk trading and utilizing funded capital to mitigate potential losses. Overall, the session demonstrated the complexities and challenges of active trading in a dynamic market environment.