Stock Market Plan 2.22

RIVN misses & NVDA stays alive...for a while.

Welcome to the recap from today’s market and the plan for tomorrow. I am at this small office in San Juan and have been working all day on some other items which has been nice given the markets were waiting on Nvidia earnings to print. So, now that we’re done with that we can await this housing data and flash PMI data tomorrow.

I’m going to spare you on my take on NVDA because everyone has an opinion on it right now just like football fans in the stands have opinions on how they could do it better than the players on the field. There are other names to trade and other situations to use your precious capital on so let’s get into it so you can stop being a degenerate NPC trader and get into the world of ringing the register.

RIVN - This stock is a great example of why a top-down approach is needed when you invest and why investing emotionally is never a good idea. I did a quick cash-tag search on Twitter and people who are long the stock can’t stop talking about how they raised estimates on delivery. They lost $1.52B…and before the growth stock crowd chimes in and tells me “Amazon lost money for years now look at Amazon!” - Good for Amazon. Dead money sucks. It’s the equivalent to paying social security; you give it away it gets used and abused and if you’re lucky you get part of it back later in life; that’s what happens when you invest in hopes in dreams like Rivian.

In issue 5 of the report I put this note out:

Sadly, I personally, decided against shorting it because I was worried that they would announce capital raise of sorts pushing it higher. Now that has dropped to where it is I might pull the trigger on a speculative long near $11-$13.

There are trades and investments. 70% of what I do are 1-3 month trades and the rest are long-term investments. Rivian fits into the speculation bucket with long LEAPs or DITM calls; it’s not a trade and it’s sure as hell not an investment unless you have the cash to burn and can wait year to get paid out. I’d rather not because in that time you should be able to run a portfolio that generates long/short ideas that beats the dead money that this stock, and many like, are.

Everything in the market has utility, even a dog like this and given the new lows it makes me want to look at a long - but first I need to see some unusual call flow activity to give me the pat the head to tell me it’s okay - just kidding, I don’t make bets on the bets of others, I can think for myself and that’s what Professional Trading is when you can develop long/short ideas.

(Note: RIVN is a fundamentally driven idea not a technically driven - there are differences)

Moving on….

S&P500 - $4960-$4970 was the new area I talked about last night.

Other than that, we need to hold $4970-$4960s and the NVDA earnings post market tomorrow combined with Fed Minutes at 3pm are catalysts for the entire market so I expect this range to stay in place until those are doneSome of your gurus out there like to call it order-flow trading; I call it paying attention. That area is key and was key we printed $4959 and ramped.

So, that was a big spot. To be clear, I use purely technical/order flow to analyze the SPX/stock indices - I was taught this when I was a prop-trader in 2009 and run the same analysis today on the futures/commodities markets - when it comes to equities investing a Top-down approach is added into this.

$5937-$5945 has to clear. That is a big area.

If that gets there and we don’t push through on the first test this is in trouble. That could happen given economic data tomorrow. $5004-$5010 is support - that has to hold. Overall these highs I am skeptical off - primarily because I use a top-down market timing/technical approach as well to determine where market turning points are so the high time frames are in an area of caution for me.

If $4970 then $5120-$5130 are my targets. Pending the economic data tomorrow - if it is positive, that gets us what I think is a “blow off” top to sell hard on the S&P500 and other names…..

What I am saying is don’t get too excited just yet…this could be like an ex-girlfriend who you just got back together with and while it seems good for now it might get rocky again in a few!

Housing data tomorrow - Existing home sales data is tomorrow. Housing stocks are at a BIG technical inflection on the charts right now so this data is the catalyst. Again, I use a top-down approach to markets (macro/fundamentals then I add on technicals) - so technically some of these names are at key spots.

We either rip on them +20% in March or we get a nasty sell-off. The thing about situations like this is you can take either side but you need to confirm the technical catalyst with the data catalyst and in this case we are a day away from getting the answer to this.

In the Premium Section Tonight:

• S&P500/Nasdaq/Crude Oil Analysis

• A look at MSFT 0.00%↑ long potential for a 1-2 day trade

• Discussion on potential RIVN trade in a week or so and a lesson on why structure of a trade matters just as much as the idea.

• Why BABA could be ready for a 1-3 day ramp and explaining the top-down approach using this stock as a case study