The Shakedown 4-20-25

Simply put, the broad market is in a downtrend and continues to show signs this is more-so a controlled selloff and will continue to do so. We learned this week that until we can break the 20ema to the upside in both SPY and QQQ, we should expect the market to continue to sell rallies.

The longer the tariff issue remains unsolved, the more uncertainty that brings to the market. In the graphic below, you'll see retail traders had the largest inflows into leveraged-long ETFs last week as traders are hopeful of a China deal materializing, or any deal for that matter. There were talks of a meeting with the Japanese consulate and while we're hoping for deals to come left and right, the reports said they unhappily left talks and are not close to a deal. I personally believe we will take months to get things resolved and a slow bleed or just sideways chop is the most likely outcome.

FOMO is your worst enemy right now. Speaking with many traders, the overactive ones are feeling the most pain as they're getting chopped to death left and right. Coming off a 2 year bull market where asset prices virtually went straight up and you were bailed out and even rewarded for absurd risk-taking, those learned behaviors are torching those same traders in this environment. I am posting the strongest charts with the best opportunities right now, but am not at all salivating for massive risk heading into the week.

Stan Weinstein, who invented "stage analysis" we love so much, said in an interview last week this is the hardest market he's even seen in his 60 market years. There is no need to be super active right now because the probability is against us in these choppy markets. While the wide ranges definitely yield plenty of opportunity, we should go into each day knowing a few months down the line when this is all behind us, we will have opportunity galore.

It seems retail traders continue to hold on hope that we will V-bottom or we will have a China deal overnight. This only tells me that the big funds will use their liquidity to continue to drive prices lower.

All eyes on the 10 year this week -- looks set to bounce.

We will see.

Economic Data This Week

Upcoming Earnings

Big week of earnings on deck!

Last week was more banks, some home builders and NFLX which kicked off tech Thursday night. NFLX had a great report as they're insulated from tariffs. They could be the rare tech name that continues to gain in this tough market.

This week I'm looking most forward to TSLA Tuesday afternoon. They delayed the launch of their most low-priced version of the Model Y over the weekend, which I'd expect they continue to sell the stock this week off that news. The stock is currently 50% off December 18th highs which feels like another lifetime. More pain in store for this one or can Elon pull another rabbit out the hat?

Wednesday morning we've got BA, T and GEV before the open with IBM, CMG, ORLY and semi LRCX after the close. Thursday morning we'll hear from AAL, LUV, MRK and VLO. Thursday afternoon we've got lots of action with INTC, GOOGL and CLS reporting. Friday morning we have ABBV and SLB.

Very important to closely track earnings releases right now. While the market is still downtrending, the best winners are born from the names that disconnect from the broad market's selling. Towards the end of the 2022 bear market, NVDA began to disconnect from the market's selling. While the market moved sideways, from Jan to March 2023, NVDA (before they split) rose from 140 to 230. The market then began to trend higher and NVDA went 230 to 970 in one year's time. The run began with the disconnect from the market's selling.

Noticed huge homebuilder DHI posted a miss on top and bottom line in their reports but was still able to gain over 3% after the report hit. Homebuilders have been harshly beat up the past 6 months. Watching to see if it's slowly forming a bottom.

GEO Long

GEO is a prison stock that actually benefits from this administration. It has remained very strong throughout the market turmoil and looks like it could disconnect and begin to break higher this week. The daily chart shows tight consolidation while the hourly chart shows an inverse head & shoulders as you can see in the 2nd picture. Watching 30.15/30.50 for potential entry locations.

Trigger: $30.15/30.50

Stop: $28.89

Target: $36+

The Shakedown 4-20-25

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