No Dips For You

The stock market, is once again, melting up-up-and away.

This time, unlike the previous two times we went long the SP500, Nasdaq and Russell 2000, she said…. “No Dips For You”.

Everyone, including us here at The Discount, were waiting patiently for a nice long entry before breaking all-time highs.

But now, it doesn’t look like we are going to pull back any time soon.

Let’s break down a series of charts to see where we are, where we’re likely going and what we can expect soon.

Stock Market Indices YTD:
Russell 2000 Index: -4.08% YTD
S&P 500 Index: +1.47% YTD
Dow Jones Industrial Average: +0.46% YTD
NASDAQ Composite: +2.00% YTD

If you remember from our last Discount Weekly, we laid out 3 scenarios where the SP500 could be headed before carving out a bottom or bouncing off support, and taking off to the upside for All-Time-Highs.

Our first scenario, was “The Shallow Fake-Out”.

Well…. so far… the market didn’t even get to our shallow pullback zone.

Buyers already got FOMO, piled in long and many are covering their shorts.

This goes to show… the markets will always humble you.

That’s why you need to respect them and play the cards you are dealt. NOT the cards you wish you were dealt.

As you can see in the chart above, we were waiting for a deeper pullback for our 3rd long in the SP500 (as well as Nasdaq).

We still are eyeing up call options and will notify everyone in our free telegram channel when/if we pull the trigger on those.

Where Are We Now?

Let’s start with the Weekly chart of the SPY (SP500)

Now let’s zoom in on the Daily chart.

As you can see, we closed strong above the all time highs on Friday.

Was this a fake out to the upside?

And will there be another leg down before resuming uptrend to our ultimate, measured-move, target close to 600 on the SPY and 6,000 on the SP500?

Well, no one knows for sure, and that’s why we use charts to tell us.

Right now, it’s safer to say that the market is extremely bullish and there will be people trying to short this thing into oblivion, proceeding to get stopped out and creating a buying frenzy in the process. This, plus FOMO buying could fuel a massive Melt-Up.

This “Melt-Up” has been our view ever since the market bottomed in October 2022.

Seasonally, we were “supposed” to see a deeper correction. And we are seeing that roll over somewhat in Crypto (which we will cover this next week).

We could still get a deeper pullback which if we buy the SP500 soon, we would be averaging into that pullback.

Where Are the “Catch-Up” Trades"?

Now that we have our bullish thesis, and the stock market indices are running away without us (for now), where is the “catch-up” trade?

In short, these are stocks where we should proceed to see a buying frenzy now that the broader markets are rallying.

First up is Shopify (SHOP)

It’s safe to say SHOP wants the big fat round number of 100… at least.

We are going to be watching this and the indices for pullbacks in our FREE Telegram Channel where we notify followers in real-time on trades and positions.

Shopify, zoomed out, has carved out a bottom and is retracing the bear market drawdown of 2022.

It would be very normal to see the 0.50 and 0.618 retraces hit on this run.

Next Up:

ARKK Innovation ETF

Similar to SHOP, we see that ARKK has been carving out a bottom here.

However it is struggling for now with the recent pullback in the indices.

It’s safe to say, that IF the markets are taking off as we think they will, that ARKK will catch a big bid soon, and reach the 65-73 area fairly quick.

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See You Next Sunday!