NVDA (Nvidia) led the market higher, as I expected. Note that NVDA now faces resistance from its previous ATH. Given how overextended the semiconductor sector is, I do not believe this attempt to make a new ATH is genuine. For bulls, wait for a confirmed break and enter on a pullback. For bears, this is a good entry, with a stop a few points above the ATH.
NDX
As I mentioned last week, a peace deal is extremely difficult to achieve, and as we saw this week, neither side showed up for the scheduled peace talks. Similar to North Korea, Iran will not give up its nuclear program or its control over the Strait, as I have mentioned repeatedly in previous notes. Even if we do not see escalation from either side, oil prices will not drop back below 80, as this is the only card Iran needs to maintain a favorable position in negotiations. If producers around the world start to increase production, I would expect Iran to start disrupting the Bab el-Mandeb Strait to push oil prices back to a level where it can wield its power. That is why this war could drag on for years.
As I outlined in previous posts, the path of least resistance is to the upside after SPX broke above the key resistance around 6870. I expect SPX to pull back from the 7200 area as early as next week.
SPX bounced from its lifeline.
Tighten your stops as price goes vertical.
XAGUSD Silver must hold above the uptrendline support around 74, or it risks heading back to test the major support around 68.
On the upside, it must reclaim 79 and hold there for a few days for momentum to pick up.
US30Y (U.S. 30-Year Treasury Yield) has made countless attempts to break above the downtrend resistance line over the past month. As the formation comes to an end, the clock is ticking, and the setup favors an upside breakout.
BZ1! (Brent futures) is a better proxy than CL for assessing traffic through the Strait of Hormuz.
BZ is back above 100 and is heading toward the recent high around 118, after which comes 140. A break below 100 opens the door to a retest of 86.
US02Y (U.S. 2-Year Treasury Yield) is back above 3.8%. If it manages to stay above this level for a few days, it is likely heading toward the recent high of 4%. This will likely be coupled with rising oil prices.
HG1! Copper remains stuck in the box range I identified months ago. A breach above opens the door to a test of the upper channel.
SOXX is overextended, and a painful correction is imminent. RSI printed a high not seen in a decade, with price extending beyond the Bollinger Bands on both the weekly and monthly charts. Remember how we identified the high in gold at the beginning of the year? Same playbook here. The correction could start as early as next week. For those who are long, a trailing stop is paramount to protect your profits while riding the last wave.
BTC1! Market update
Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).
BTC1! Market update
Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).
MAGS (Magnificent 7) struggles to break above 67 as expected. If price continues to stall, it risks heading back towards 63.
XAUUSD Gold has struggled to maintain its upward momentum, has breached the 4770 support, and is now hanging on to the 4660 support level.
A break below this level opens the door to a retest of 4.4K, after which comes 4.1K.
On the upside, gold must reclaim 4770 to pick up any momentum toward 5K, which is a significant resistance.
NVDA Very significant development in NVDA (Nvidia)'s price action, as it has broken above the key 196 resistance. As long as it holds this level, it could continue to lead the market higher.
SPX broke above our line in the sand at 6870 on Monday. As I mentioned in the desk note on 04/14, there were no longer any signs of bearishness: VIX backtested and was rejected by the major trendline, DXY remained below 99, yields were down, oil was down, and bellwether sectors were leading to the upside. The move that followed the clean break above the key 6870 level was fierce to the upside. I think we’ll see some pullbacks from the 7200 area next week. Despite the rosy tape and headlines suggesting we are getting close to a peace deal and that the Strait is open, with price going vertical, I would advise caution going forward. I stand by my view that a peace deal will be very hard to reach, as Iran will not give up control of the Strait or its nuclear program. Ship traffic through the Strait remains low, and Iran still decides which ships can pass. Our monitors show that the majority of ships made U-turns after attempting to cross the Strait following Trump’s claim that it had reopened. In war, the side that can endure more pain tends to prevail, not the one that can inflict more of it. Equities have rallied hard, oil has been dumped, and yields are back below levels where Trump could pull another wildcard to manipulate the market again. As price goes vertical, stops are paramount to protect your profits.
Similar to SPX, NDX showed strong upside momentum after breaking above the key resistance on Monday.
XAGUSD Silver is tangling around the key resistance near 79.
If it can hold above it for a few days, we could see it head higher.
CL1! The peace talks that took place last weekend failed, as I expected, but no escalation followed.
We saw a big opening gap on Sunday night that pushed WTI above 105, but as de-escalation progressed, WTI closed in the low 80s on Friday.
In my last Tactical Positioning note, published just before the peace talks, I outlined two possible paths for WTI, and it appears that it has chosen the downward one.
It is now hanging on to the 81 support level. Once it breaks below that level, we should see a gradual decline into the low 70s.
BZ1! (Brent futures) failed to reclaim the box and headed lower, as expected.
US02Y (U.S. 2-Year Treasury Yield) broke below my key support level around 3.8% on Friday.
HG1! Copper continued its upward momentum and is heading toward the upper channel.
NIFTY (Nifty 50) bounced off my 22K support and is now facing resistance around 24.4K. I expect price to stall here unless it can force a sustained break above 24.4K.
