Dead Cat Bounce or Nine Lives Rally?
RLT Newsletter 4.1.26
I last wrote on Monday afternoon when things looked bleak. Multiple key levels had been taken out, but after so many consecutive bear days, a relief bounce felt overdue.
We didn’t have to wait long. Tuesday delivered a strong gap up that not only filled the gap above but blew right through it. Wednesday followed with another gap higher and another solid green close. The market has now put in two very strong days.
The question on everyone’s mind is this: Is this just a dead cat bounce, or the start of something more bullish?
I don’t have a crystal ball, but I can lay out the key levels that matter most right now and what the bigger picture might be telling us.
Note: I’m writing this before Trump’s big April Fools speech this evening. I expect his comments will generally lean toward the idea that the war is winding down, which should be market-friendly in the short term. That said, in this environment, one tweet or sentence can override any chart or level.
SPY Daily Chart
The Bigger Picture on SPY and QQQ
If we zoom out, SPY and QQQ are still telling slightly conflicting stories.
SPY looks like it has begun a B-wave higher, while QQQ still has the potential for one final leg down. One of them is lying. And in this market, it has been difficult to tell which.
When the macro picture gets murky, I usually do one of two things. I wait for clarity, or I zoom into the candles and navigate the short-term mess as best I can. Lets zoom.
SPY gave us a very bullish candle on Tuesday accompanied by the highest volume of the year. That kind of candle should hold for several weeks to over a month at least. If it doesn’t, things get quite bearish. So this candle gives us a solid level to base risk management around.
That said, it is not the most ideal setup. Because of that, on any retest, I want to buy as deep as possible into Tuesday’s candle to improve my R:R. Chasers are getting punished hard on both sides right now. This is absolutely not a market to be chasing, especially when FOMO is running high.
What complicates things further is that we are still trading below the 200-day SMA, and we have not seen clear capitulation or hit any obvious major support. This bounce still fits the classic framework of a 200-day SMA retest before the next leg lower. We see this pattern repeatedly when SPY breaks below the key moving average.
My overall game plan is to sell into the 200-day SMA area. There is also a cluster of anchored VWAPs in that area creating a resistance zone roughly between $655 and $665 on SPY. I expect some selling pressure to develop there, which should bring price back down into Tuesday’s candle.
As we retrace, I will look to get long again, ideally deeper into that Tuesday range. I will hedge under Tuesday’s low if we reach it.
The violent buying over the last two days has largely been short covering. Now we will see whether real buyers step in to pick up the baton and push us nicely higher. If not, this large bounce, even while aided by news that the war may be winding down, could simply be a neckline retest or dead cat bounce.
QQQ Daily Chart
The Trillion Dollar Titans (Mixed Signals)
For any sustained rally to take hold, the Trillion Dollar Titans need to participate meaningfully. Right now, the signals remain mixed:
NVDA is retesting the 200-day SMA, tracking close to the bearish path I outlined on Monday. Massive resistance sits at $179 to $183, but on the bullish perspective it has reclaimed $169, which now acts as support.
AAPL looks poised for a quick push toward $260 to $265. It reclaimed the 200-day SMA in a single day, so I am not even counting that as a true break. It remains one of the strongest names in the group, though it lagged the broader bounce the last two days. This could offer upside opportunity if bulls take control.
GOOGL did not quite reach my ideal buy zone and closed back above the key $295 level, though not by much. This can easily be read as a head-and-shoulders neckline retest, which would target the 200-day SMA again. I will still buy dips but likely will pyramid in rather than the ideal one large high R:R entry. A close above the 100-day SMA would be bullish and should target new all-time highs. Big resistance sits at $310.
MSFT still looks vulnerable to another leg down toward $450 after coming close to a 200-week SMA retest. If it starts closing back above the 200-week SMA, I will shift my view. But until then, I expect at least one more low. Even if SPY, QQQ, and the stronger names make higher lows, MSFT could still print a lower low.
AMZN could be forming a giant double bottom targeting the gaps at $224. The stock has been extremely choppy and will likely follow the broader market. Overall, I still think the overhead gaps get filled, possibly after one more quick dip toward $194.
AVGO remained weak, never reaching its neckline and staying firmly below the 200-day SMA. I could see it pushing up toward $340, chopping around, then resuming lower. Not much edge here for now.
META filled the gap from March 25th 2026 and April 30th 2025 in extremely volatile fashion, whipsawing both bulls and bears. It is still well below the 100-week SMA and has not yet closed above the March 26th candle. If it does that, it should press into the underside of the 100-week SMA, where I expect stiff resistance.
TSM reclaimed the 100-day SMA in a day. If it can push through the anchored VWAP from the ATH, there is a high probability of filling the gap near $365. If not, expect chop around current levels before likely resolving back toward the 100-day and the gap below.
TSLA is still firmly below the 200-day SMA and locked in a stair-step decline since its December 2025 high. Watch support near $339 and resistance at the 200-day SMA.
None of these names give a conclusive green light that the bounce will be sustained. Based purely on price action, the bulls still have significant work to do. The structures remain broken, and the bear thesis is very much alive.
That said, candles like the one we saw on Tuesday often mark at least a short-term bottom, sometimes lasting a month or more. With that in mind, it makes sense to carry some bullish exposure. Why not enjoy a strong April before the classic sell in May, even if that old adage has not worked particularly well in recent years?