Don't Be A Sheep

Swingly Exposure Status: Moderate Risk

OVERVIEW
Amateur vs Professional

One of the most conspicuous indicators of an amateur trader is the inability to make autonomous decisions. Instead of relying on their own judgment, the amateur trader leans heavily on "tips" and seeks guidance on interpreting data. They lack the self-assurance to filter out external noise and establish a direct and insightful connection with the market.

Contrastingly, the professional trader operates on a different level. They embody a mindset akin to that described in Steven Pressfield's book, "The War of Art," where the notion of "resistance" impedes the journey toward a heightened state of creativity. In this state, decision-making transcends simplistic emotional triggers such as fear or greed, allowing for a more informed and objective approach to trading.

In yesterday’s session, the prevailing sentiment appeared overwhelmingly bearish, as indicated by numerous financial guru reports. However, our morning report stood in stark contrast, presenting a decisively optimistic outlook.

The market continues to navigate through a period of turbulence, exacerbated by the release of daily earnings reports. These reports exert significant influence on both buyers and sellers, prompting reactions fueled by heightened emotions of fear and greed. Consequently, such sentiments can lead to abrupt shifts in volatility.

We encourage our readers to adhere to the adage, "if in doubt, zoom out," whenever they sense emotions overwhelming their decision-making process. Notably, every major index has recently surged above all key daily and weekly exponential moving averages (EMA), entering a phase of consolidation to assimilate the sharp upside momentum. Rather than succumbing to panic or apprehension, now is the opportune moment to concentrate on accumulating positions in the highest quality assets available in the markets.

Nasdaq

QQQ Daily Chart

The Nasdaq is currently maintaining its position above $436, a level that delineates the bottom of Monday's lows and represents the lower boundary of the sideways consolidation since the end of February, just before the official pullback began.

It's worth noting the market's opening behavior, which commenced with a gap down to this level, promptly followed by an influx of demand that propelled the share price back up. In bullish periods characterized by upward trends, the opening tends to be weaker than the closing, with passive sellers initially met by aggressive buyers who consistently lift the ask throughout the session. This pattern was evident yesterday.

Furthermore, the volume remains notably low, indicating minimal participation in the recent rally and suggesting that the majority of investors are still observing from the sidelines before committing to a direction. Such hesitancy may result in heightened volatility spikes in either direction once investors eventually make their decisions.

S&P Midcap 400

MDY Daily VRVP Chart

The midcaps are currently holding steady within the $541-$542 demand zone, which is serving as a robust support level as observed in yesterday’s session. Should this area be breached, we maintain confidence that the MDY will find support around the $539 mark, leading to a potential bounce and reinforcing our optimistic medium-term outlook for the index.

In the immediate short term, there's a possibility, and indeed it's potentially likely, to witness a temporary pause as we approach the end of this week, accompanied by a brief retest of the rising daily 10-EMA around the $538-$539 range. However, we anticipate the MDY to trend higher by the conclusion of next week compared to its current share price.

Russell 2000

IWM Daily VRVP Chart

The small caps are trailing behind their larger counterparts, displaying their characteristic trait of higher volatility, which is currently more pronounced. The narrative mirrors that of the broader market but with heightened intensity. The Visible Range Volume Profile (VRVP) chart illustrates a clear rejection against the overhead supply zone. Moreover, it indicates buyers stepping in at the $203 demand level to recoup what the IWM lost during pre-market trading.

DAILY FOCUS
Nothing Changed

A painting on a wall warning visitors about video surveillance

Our focus for today's session mirrors that of yesterday. We maintain an optimistic outlook as we analyze whether the extensive list of high relative strength stocks, which have formed tight trading ranges, will break higher. In the event of a breakout, we will execute trades as usual. This approach also applies to earnings-based episodic pivots (EP) today.

We emphasize the importance of not rushing to accumulate positions without first ensuring the validity of the setups. If the setups meet our criteria, we will proceed with execution.

As reiterated yesterday, our objective remains actively seeking to purchase shares in the highest quality assets available in the market, all of which are currently trading at discounted prices.

WATCHLIST
Our Favourites

MYO: Myomo Inc

MYO Daily Chart

  • Myomo, Inc. reported an earnings loss in aftermarket hours yesterday, with a revenue decline of 7.77% below estimates and an earnings per share (EPS) loss of 3.45%.

  • Over the past four sessions, MYO has displayed an extraordinary contraction in volatility, with an exceptionally tight trading range and a notable surge in volume.

  • Despite MYO's underwhelming earnings report, we will closely monitor the market's reaction to determine if the multi-month base remains valid and if it can potentially serve as a springboard for the stock to reach new highs.

SMR: NuScale Power Corporation

SMR Daily Chart

  • NuScale Power Corp. has an upcoming earnings report today expected to outperform.

  • The stock has experienced extreme volatility, with both volume and price contracting since the Small Modular Reactors (SMR) surged by 260% in early March.

  • With a mix of strong fundamental growth, impressive Volatility Contraction Pattern (VCP), and high volatility, NuScale presents an opportunity for swing traders to potentially increase their portfolio value significantly.

This newsletter does not provide financial advice. It is intended solely for educational purposes and does not constitute investment advice or a recommendation to trade assets or make financial decisions. Please exercise caution and conduct your own research.

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