Market Analysis using data from Aion Analytics, Historical precedence and key technical levels

Yesterday, we got a rejection off of the 7800 level on ES. We know this to be a significant level of interest for sellers to step in, so the rejection was not particularly surprising in truth, especially after the 6% move in 4 days into the resistance:

https://preview.redd.it/9xucur5x5rhh1.png?width=1400&format=png&auto=webp&s=3b17804af38a0ca5cd8904c9828fb91994b77a54

This morning we have earnings related pressure. I think it is a sign of continued skepticism in the market that reasonably good earnings reports are not getting rewarded adequately. VIAV's earnings report, for instance, was absolutely A+. Currently up 1.5%. WDC's earnings report was not bad, currently down 15%. 

We have DDOG down 23% this morning, HUBS down 23%, both putting pressure on IGV, which itself is down 3.1%. 

On the hardware side, we have WDC down 15%, SNDK down 11%, which is putting pressure on the momentum trade and semiconductors, with SMH also down, albeit less. 

I was looking and hoping for SNDK to put in a cleaner report, in order to give SMH and momentum names that nudge to get above the 578 level:

https://preview.redd.it/y3430i4y5rhh1.png?width=1400&format=png&auto=webp&s=52e5bb80b712e149e45e66d54346bf5d03fe7612

Above there, there's not much stopping us into the 605 level. 

However, SNDK margin guidance came in below current margins, which again raises the question of whether we are at peak earnings here, which is the concern the market has been contending with so not great. Their explanation on the call seemed reasonable, that they were happy with above 80% margins, hence they weren't looking to press that necessarily higher to be fair to customers, but the market wanted margins to be increasing into next quarter to show that the memory cycle is still accelerating to the upside. 

The weekly chart I think shows the situation for SMH the best. We want to see a weekly close above the 9W EMA ideally. 

The earnings reaction has created some pressure in premarket, but we noted in the last reports that some digestion or give back after the massive move over the past 4 sessions was entirely normal and actually healthy. Things can't keep going up in a straight line. 

US500 seems to be mostly correcting through time, allowing the moving averages to catch up and RSI to cool off. 

https://preview.redd.it/7z4utr0z5rhh1.png?width=1400&format=png&auto=webp&s=acd60c902a665612c0f98b4b62c8382eede1118e

Whilst NDX is pulling back off its resistance. We need to see that trendline taken out at some point soon, but some pullback into the 50d EMA or the 29k level is what I expected and would still be a healthy liquidity test. 

https://preview.redd.it/nasjenqz5rhh1.png?width=1400&format=png&auto=webp&s=65046105aa4b9571bcdebacf7f4aa5b56c2ec56a

We do have some fundamental events this week including the NFP print tomorrow, but if we look at the Aion Analytics data, we see that liquidity is, as we noted previously, still supportive, especially so into August.

https://preview.redd.it/sox7xvl06rhh1.png?width=746&format=png&auto=webp&s=d43f1c128e4ed87efcab10b389268b10d12de7ca

This favours BTD.

Then if we look at this screen from the dashboard, we see the key levels and that the charm anchor moved from $740 below spot to $780 above it. The decay pull just switched sides.

https://preview.redd.it/hbanehg16rhh1.png?width=1180&format=png&auto=webp&s=89b22bd813432a8aa5b637f45a92d0be216b479b

Now some additional data here to suggest that obviously some give back or drawdown from this high would not be unanticipated:

Here's previous instances QQQ went from -10% to within 3% of ATHs within 4 days:

https://preview.redd.it/v47eb0726rhh1.png?width=1318&format=png&auto=webp&s=e875cb028eab2ca416c3c1fe871e49642bbd9a43

And here we see a similar stat:

https://preview.redd.it/ik14lfr26rhh1.png?width=1270&format=png&auto=webp&s=26f6cf787c66d3f73a195b7f90a405cb415ebba2

Obviously historic performance is no guarantee of future performance, but ti does suggest that we can very likely see some digestion of the move higher, with some dip here, but the liquidity data from Aion is a good sign that it will be absorbed in a continued move higher. 

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