The Shakedown 12-8-24

by Shake P
What a market! The 3.5 weeks since the election has been a phenomenon within momentum stocks. Times like these, valuations don't matter as investors continue to bid up the riskiest stocks.
 
Right now, the SPY and QQQ are both riding the 5ema higher. We haven't seen any signs of selling in the slightest. Once that 5ema breaks, I am expecting some sort of pullback. I am absolutely a buyer of pullbacks into year end. But the past 3 weeks, I have come into the market in 'attack mode' because there were dozens of A+ setups at seemingly every turn. This week's scan did not have me as excited as the previous 3 judging by the setups yielding tight risk entries. 
 
This week's data to lookout for are CPI and PPI Wednesday/Thursday morning and then the following Wednesday we have another Fed meeting. If Fed cuts rates again, that would theoretically be considered another "back to back rate cut" setup where stocks, historically, pump higher the next 6 months. 
 
 
Anecdotally, I've seen more PnL posts in the last 2 weeks than in the prior year combined. I could list 20 texts I've received in the past few days from friends just like the one above. These aren't the friends that manage boat loads of money for a living, these are the friends that are not profitable from 10 years of gambling in the stock market. Nothing about the market action that says we can't keep pumping higher, this type of stuff gets my spidey senses tingling that a pullback could be around the corner. 
Just something to keep in the back of the mind...

That being said, 15.5 trading days left in 2024.
Let's make them count.
 
Now let's see the charts.

 
Economic Data This Week

 

Earnings This Week

 
Put/Call Ratio
0.75 on the put/call is our queue to get defensive.
0.84 reading heading into the week.

 
 
This market has been exactly as amazing as we had anticipated following the back to back rate cuts. This market run taught me the importance of understanding the underlying economic backdrop because it gave me the confidence to put major risk on to capture these moves. This is why I was hammering home on the importance of reading Martin Zweig's "Winning on Wall St." which breaks down just how bullish the underlying environment is after back to back rate cuts. Confidence is EVERYTHING in trading. Wanted to go over some of the recent winners, not to flex how great we are, but to understand the environment heading into next week.
I wanted to point out some of the SICKNESS of this environment. It has been really great to us. Have to be realistic though, and I would not be surprised if one of the next two weeks was a 'down' week as we are so stretched to the upside. Can we keep going? Absolutely, I have no idea when we break this ridiculous momentum uptrend in SPY. Last week I came into the week with the mindset of 'Attack Mode' given the plethora of A+ setups. I am not seeing that to the degree that we have seen in the past 3 weeks, heading into this week. 

Onto some fresh setups

 
XMTR Long
High and tight flag in XMTR as it continues to wind up and tightly consolidate before the potentially explosive next leg higher. Watching for an entry up through 32.70/33.

Trigger: $32.70/33
Stop: $30.89
Target: $38+

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