All Traders Should Know This Simply Rule! | PS60 Process

Here's Dan Shapiro to help you find your edge, master your process, and own your future. >> Hey guys, good evening everybody. Welcome to another edition of the axthetrader.com nightly wrap-up show. Thank you very much for uh tuning in. Guys, take a second out. All it takes is a second uh support the channel and just click that like button. Hopefully, again, I can point you in the right direction. So, we talked about yesterday how we're kind of in the, you know, home stretch of summer. Uh, don't expect any majestic statements uh by the markets. You're probably light less likely to have expansion days uh to the upside just because a lot of people again are on vacation. It's very very important to understand that. But it's a really amazing we we talk about this through throughout all the years of I've been uh hosting this platform. I've been hosting this platform for 17 years. It's really amazing how this sentence or this statement is so true. Uh you're you're only as good, right? The day is only as good uh as the next day starting pitcher. That's the momentum. And yesterday you had the semiconductors doing incredibly well. Micron going crazy, SMTC going crazy, Sanders going crazy. The semiconductors were above the 50-day moving average. And then you wake up this morning and you go, "Holy crap, what just happened?" Right? Uh semiconductors got hit. I think that's pretty much uh an understatement. They got really really hit today. Um you got main drivers for uh Treasury yields are rising. Oil prices uh are rising. You got geopolitical concerns obviously still on the table. and semiconductors didn't like that. The most important part of all this is the semiconductors gave back the 50-day moving average. Uh if you are a brand new trader, again, uh every single time I wasn't even going to record a video tonight, uh but I thought this was a very very important point of kind of entering tomorrow's session. Uh for all you guys who are brand new traders, again, just write this down. Uh, anything above the 50-day moving average, risk is on. Anything below the 50-day moving average, risk is off. Does it mean that there is an automatic death sentence now that the semiconductors down 5%? Um, you know, that's it. This is it. No, because again, tomorrow, what's good about it is there's always an opportunity to reclaim it. The problem is the semiconductor 50-day moving average is in 590s and we closed today uh at 569. Just to kind of put a little bit more color on top of it, a little bit more context, last time we reclaimed the 50-day moving average was on April the 7th and the SMHs went from 400 to June 22nd highs of 671. at 271 points. Last time we lost the 50-day moving average, the SMH has went from 606 uh to 503. So, 100 points to the downside. The problem is we didn't close not once, right? In this whole move here, we didn't close not once above the 50-day moving average. And today, we closed significantly below that. Now, why is that important? Because the predominant run uh in this last bull market, the last you know couple of years have been the semiconductors and outliers of anything that you thought was normal was in the cards was rational. MUS of the world, the Evago of the world, uh AMDs, the Sandis, you know, they all went out of their minds. So, now that we've closed below the 50-day moving average, it's going to be a very, very tough uh in my opinion, it's going to be a very, very tough climb, at least on a one-day cycle. Is it possible we rally tomorrow on the same news that took us up? Of course, it's a stock market. Again, you know, nobody here is trying to predict what happens. Again, we're all trying to do is just take in the data, right? Take in the data and make sure that we're looking at the market the right way uh for tomorrow. So obviously if we do have a followth through day, you want to be looking at the semiconductors, right? You definitely want to be looking at the semiconductors below today's channels. You know, here let me give you guys a couple of examples. Avongo, I only took two trades today. One of them was Avago uh lost the previous channels low, lost the 50-day moving average. You know, gave us a pretty good move uh at the open. And check out Avago's chart. You see, you see this blue line, right? This blue line represents the 150day moving average. You can see how many times a Vago has been defended. Once, twice, three times, four times, five times, six times, seven times. And it got defended again today. Eight times. Right now, what happens if there is a follow through tomorrow and the semiconductors have a day two fall? Well, that's my point. You I will I will definitely be looking at a Vago. If we could lose uh today's channel tomorrow, you know, this thing could get hit. You had Micron uh had a really really strong 3-day move. We talked about they were blasting the thousands thousands thousand thousand thousand calls short-term expiration you know and they it exploded right exploded went all the way up to 1,036 but on the close uh MU lost the 962 levels you can see you're closing the 940s so for Micron to be back in the good graces of the bulls it has to reclaim back that 963 level tomorrow on the close the longer we build below the 50-day moving average in any security right any theme, any index, uh any ETF, the longer we build the base below the 50-day moving average, the higher probability you will get more selling. So, Micron uh needs to get back above today's channel, uh today's 50-day uh close tomorrow. And obviously, if it starts losing today's range, uh there should be more downside. You got SanDisk, right? You got SanDisk holding on, right? Holding on for dear life on the 50-day moving average. Again, like I said a couple minutes ago, you know, this could be a scenario. It's an outlier event. One and done. We start rallying again tomorrow. But just in case we don't, if Sanders tomorrow loses the five-day moving average, there is going to be more selling. You know, look at AMD, right? Look at AMD. AMD had every opportunity to reclaim the 50-day moving average. It could not do it, right? And obviously on a day like this, the semiconductors got punished. Guys, let's watch the, you know, let's watch the August lows. if this thing starts losing the August lows tomorrow and again if there is uh if there is a continuation day now let's keep an eye on AMD if it starts losing uh the August lows this thing is going to get hit as well um some other names that look interesting right that look interesting that we saw some pretty good bets continuation bets all up and down the line SpaceX is is still getting a lot of really aggressive deep out of the money short-term from expiration calls. This is one of the very few names that actually closed higher than the open. Again, if you are brand new to Japanese candlesticks, you can see the green candle means it's a higher closed and open and they're still pounding. Uh obviously, uh last week's highs is going to be a very very important price discovery level. But I want to watch this thing in the next couple of days. If it can just start taking out a couple of days worth of channel, we should see a test of last week's highs. Looks very, very interesting. Uh Apple was one of the, you know, we only had like two pivots today uh in the webinar. One of them was Apple. Apple today and I actually put it out on my regular Twitter feed. For all you guys who follow me on X, I said, "Hey guys, watch this thing 309. If you could reclaim back 309, that's the 50-day. This thing could spike." Well, that's exactly what it did. you know, went from uh 309, our pivot is was 308, but 309 reclaimed the 50-day moving average, traded all the way up to 1150. Why is that important? That is the 34 EMA. If there is going to be any continuation on Apple tomorrow, it needs to reclaim back not only the 34 EMA, but the 20-day moving average as well. Uh Meta continues to get absolutely blasted, right? It had this passionate move down, romantic move up, and now it's just getting absolutely drilled to the downside. A lot of volatility. This kind of is a mirror image of what happened all the way back to January, March of this year. Had this big move down, big move up, big move down, big move up, and now it's starting uh it's move down. Uh Amazon, who had an inkling of daylight today, gave it up, continues to be sold on the Jeff Bezos uh selling spree. Tesla is a little bit is I you know I I I am looking for a very very specific channel tomorrow and I'm going to share what my game plan on Tesla is. Okay, do a visual, right? Do a visual with me. Okay, you see this green line, right? You see this green line here? This green line is the 10day moving average. You see how many times Tesla has touched this this green line and bounced, right? touched it today, bounced, touched it today, it touched it on on 812, bounced, touched it on 8:14, bounced. You see what happened today, right? It touched it again today at the open and bounced. Now, if we are going to get a second wave of selling tomorrow, again, we don't know, right? But if we are going to get a second wave of selling tomorrow and this green line falters again this green line and is the 10day moving average it's it's the shortestterm sentiment right above the 5day so it's kind of like the birth of the trade if you any of you guys have ever been in the webinar or any seen any of my PS workshops the 10day moving average is the birth of the trade so I will be watching Tesla if they could lose the 10day moving average after holding it four times in the last two weeks weeks, there is going to be a sell signal. However, there's a flip side to that, right? We saw some really, really weird, very, very odd $10 out of the money calls coming in for the weekly expiration. One guy even came in for 1.2 or 1.3 million of the 345 calls. Why is that weird? Cuz it's $6 out of the money, $7 out of the money, and the cues and the semiconductors were absolutely getting blasted today. So, it's very, very odd. So, here was the game plan. I want to short it below the 10day moving average and I want to buy it above if it reclaims back to 20 because if it reclaims back to 20 there's a really high probability especially if we see more call buying come in it could push back to last week's highs. If it loses the 10day moving average you could see a move all the way back down to this 325 323 level which will obviously show us another price discovery level. If you look at the spy, uh, and again, it's I really don't follow the spy just because again, I understand there's a crossover with some of the technology names that I follow, but I did notice it was a big break today and it violated literally two weeks worth of price action. You can see not only did it give up the 5day, it gave up the 10day moving average on the close. Guys, watch, you know, watch spies tomorrow. You know, if this thing starts losing this 767 766 level, you could get more downside as well. The QQQ's are not yet at the level of concern. Okay, but keep this in mind, the semiconductors do represent a very very vast portion of the NASDAQ 100. So, if there is a second day pull, well, there's going to be a second day pull in the NASDAQ as well. Everything is okay structurally and the QQQs unless we lose roughly 712 on the close. If we lose 712 on the close again, look at the last time we lost the 50-day moving average on the QQQs. It was right here on July the 15th and we went from 724 all the way down to 661. Again, don't roll your eyes at the 50-day doesn't matter. If you are lucky enough, if you don't feel it enough, it'll, you know, these stocks will just reclaim it back, especially the semiconductor group. But if they start building and putting in a ceiling below the 50-day moving average, the higher probability you will get a very very aggressive move. So, watch those levels, right? Watch those levels uh in the spies. Watch that level on the cues. Again, any close below 7, you know, 712 on the Q's is not a good thing. So, we're kind of set up tomorrow. Um, I'm trying to trade the highest value plays. I'm watching Nvago. Like I said, I'm watching obviously Tesla. I'm watching for a potential day two run on Apple in case there is some strength tomorrow in the markets. Again, you could take your pick of semiconductors. Anything below today's channel could potentially get a second day wash. Micron, Nvidia, uh, SanDisk, uh, you get, you know, whatever whatever your drug of choice is. If one goes, they all go. Guys, have a great night everybody. Hope everybody's doing well. Again, the law last couple weeks of summer, you have to really pick your spots. You really have to understand the dynamics of what is happening here. We don't have enough market participants for the next two weeks to really propel this market to all-time highs. But at the same time, we are starting to get a little chinks in the armor, especially in these indexes, that if they all start breaking at the same time, you don't need a lot of participants for these bids to go away. Guys, God bless everybody. have everybody doing well and with God's help, I'll see you on the field tomorrow. Take care.