The Trump Pump

RLT Newsletter 4.11.26

Last week was bonkers. I think we can all agree on that. Bulls are back in the game, and SPY and QQQ have pushed back into the distribution levels they’ve been consolidating within for the past six months.

The market feels more bifurcated than ever, and typically when key names aren’t all participating, it’s not the ideal environment for a sustained bull run. It’s usually more conducive to chop.

The bulls are pointing to SMH and saying the rest of the market will catch up and follow semis into another run toward the highs. The bears are pointing to IGV and arguing the market will follow software lower. I’m somewhere in the middle right now.

SMH Daily Chart

I can see a strong case that volatility isn’t over and that we could at least see a double bottom, with the April lows getting retested in the coming months. We are now testing the 78.6% retracement of the recent drop, which is the exact level many historical analogs hit before finding resistance and rolling back over.

At the same time, Tuesday’s gap provides solid historical evidence that we could still be headed to new all-time highs before everything is said and done. It’s possible we do both. Push to new highs in an extended flat B wave, get everyone fully bullish again, hedges removed, and capital chasing strength, only to then pull the rug and roll over into the next leg down. That would be the ultimate max pain scenario.

If this were Bitcoin, I’d say that’s exactly what happens. But SPY doesn’t always follow the cleanest max pain path the way crypto often does, so I’m still on the fence.

Because of this uncertainty and the lack of a clear edge in the broader market, I’m focusing on individual stocks with high-probability setups, defined risk, and strong risk/reward. As I’ve said many times, I’m leaning bullish as long as SPY and QQQ remain above the 200-day SMA, so I’ll stay in buy-the-dip mode while keeping shorts limited and tactical.

I do think the selloff in IGV and software, especially names like MSFT, is overdone, but I’m not stepping in front of that move yet. I want to see bullish momentum and some confirmation before trying to catch a bottom in those charts.

SPY Daily Chart

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Palantir Technologies Inc

One chart that is quite interesting to me right now is PLTR.

The President tweeted about PLTR on Friday, which instantly halted its major selloff and sparked a strong bounce. Regardless of where you stand politically, it’s wild to see the financial impact his tweets are having on stocks right now, especially now that he’s targeting individual names!

But putting that aside, the real question is whether Friday’s hammer and the current support level can hold.

If PLTR breaks below Friday’s low, I think it likely moves quickly down toward the $108 area, where we have a key VWAP level lining up with the 100-week SMA. That would be a much more compelling long term buy zone. PLTR has never retested its 100-week SMA, so if it gets there, I will be quite interested and ready to click the buy button.

The risk/reward in the $110 to $90 zone is extremely attractive. A move back to prior all-time highs from that range would be roughly a 100% gain, and I’m confident I could structure the trade with less than 20% downside risk. That sets up a potential 5:1 risk/reward on a longer-term swing targeting the highs.

On the flip side, if Friday’s low holds, there’s a shorter-term opportunity. A move back into the $136 to $146 range is very possible, with a stop just below Friday’s low. That also offers a solid risk/reward setup for a quicker trade.

Either way, PLTR is setting up with clearly defined levels and creating multiple trading opportunities with quality risk/reward depending on how price reacts this week. Plus, we now know if it gets too bearish, the United States President will step in and fire off some tweets to pump it up.

PLTR Daily Chart