Hey traders!
The Nasdaq (NDX) just made a new all-time high, recovering from the decline from the Iran war. This came after the VIX and the put/call ratio maxed out, and talks began to make progress. This is a great reminder that no matter how bad the news gets, when the put/call ratio gets stuck above 1.0, the market can rally hard and fast. When the initial gap up occurs, if you have any remaining short positions on, that’s a great spot to cover and shift directions, especially if the move occurs on high volume and a large gap.
Covering shorts is one piece, but getting long is the second part of that, which I have been doing. With the reversal off of the lows came buy setups, especially as tickers break through overhead resistance. We spoke previously about using breaks of the 50 SMA to the downside to short relative weakness tickers. At this stage, as the market is charging higher, this has shifted to going long relative-strength tickers that break overhead resistance.
As a side note, on my charts, the key long-term moving averages referenced are: 50 SMA (yellow), 100 SMA (light blue), 200 SMA (pink)
NDX – Daily Chart
What you’ll notice here is that when the NDX broke through the 200 SMA, it also broke through the 50 and 100 SMAs, staying above both zones, which was a bullish technical sign to shift to the bullish side. Sometimes gaps higher only gap into overhead resistance. This one was different because it gapped above the resistance zones. After that gap, the rally gained volume and took off, hence why changing direction as a trader made sense.
The Apple Breakout Move
I love watching tickers for key technical breaks. Typically, I want to see follow-through on the second day, but given the strength of this rally, I’m already taking positions.
Check out the chart below:
AAPL – Daily Chart
This is a screenshot of Apple in the Earnings Hot Zone. What you’ll see is that AAPL is in the pre-earnings 21-day time frame. This ticker also has a daily squeeze and is breaking above the 50 SMA and the 100 SMA on high momentum. It closed up +2.94% on the day!
It doesn’t have a positive pre-earnings average, but given the technical factors, the overall market condition, and the macro scenario, I’m still jumping into this one and buying long calls in the earnings series, to trade a rise in price + implied volatility.
Macro Scenario
One primary reason I’m going long Apple here is the massive adoption of the Claude Code platform, which runs best on Apple devices. I have been diligently working on my own AI coding project with my MacBook Air. I went to the mall yesterday with my husband, where he was picking up several new Apple devices. Surprise, surprise: the Apple Store was packed at 2 pm on a random Tuesday. John told us he ordered a new machine, and it won’t be available until August. I haven’t even been to a mall in years!
Make sure you check out the next episode of Five Star Trader, where I’ll debut the free earnings tool I’ve coded up. I can’t wait to share it with you!
Anyway, Apple may have been a bit behind in the game when it comes to its own AI software, but it has the lead in hardware and the platform. This is why I feel the Earnings Hot Zone stats are not telling the full story: something critical has shifted with Apple recently, and I believe we will start seeing that move play out soon.
