Tuesday Top Trades
RLT Newsletter 3/10/26
U.S. markets saw some carnage Sunday night in futures—but if you just woke up Monday morning and checked the open, you’d barely have noticed. “Barely” might be overstated depending on your watchlist, but much of the overnight damage had already been clawed back by the bell. Unfortunately.
I say unfortunately because the buy setup I flagged in Monday’s newsletter, SPY tagging (or nearing) the 200-day SMA, would’ve been a perfect entry for the fade. Now, after Monday’s massive recovery candle, we may have to wait. I still believe SPY eventually works lower toward that level, despite the strong bullish engulfing print.
Volatility has spiked hard. Look at the past week’s wild candles: gap downs followed by big up days. Classic corrective behavior. If you scan the SPY daily chart for similar large reversal candles after breaking the 100-day SMA before hitting the 200-day SMA the majority see follow-through lower at least to the 200-day SMA.
At this point, I’m genuinely wondering which breaks first: my sanity from covering this chop, or the market finally flushing lower to reset momentum and deliver clearer direction and better risk/reward.
SPY Daily Chart
As Jeremy pointed out in Tuesday’s Top Trades video below, it would make sense for SPY to drop toward the 200 day SMA before seeing any kind of sustained bounce. After Monday’s bullish heroics, the idea of going lower might feel impossible. However, now that SPY has decisively broken the 100 day SMA, the path of least resistance is generally sideways to lower.
At the very least, we should expect more of the choppy, sideways price action we have been seeing. If SPY does move down to the 200 day SMA, it should present a high probability short term buying opportunity with excellent risk to reward.
Risk to reward near the 200 day SMA is very attractive. From that level, there is roughly 1 percent downside to a true breakdown (close below the 200-day) versus about 6 to 7 percent upside back toward all time highs. However, a decisive break below the 200 day SMA around $650 would flip the chart bearish in the near term, especially since there is very little support until around $613. Until price actually reaches the 200 day SMA, the chop will continue. If that level breaks, be prepared for a quick bearish move.
QQQ Holding Relatively Better
QQQ has long ago broken the 100-day SMA and is chopping sideways in a downward-sloping parallel channel below the key average. If SPY tests the 200-day, expect QQQ to fall to about $582 support just below its own 200-day. Neither has hit the 200-day yet, but both are firmly below the 100-day. Welcome to the chop zone, day 153.
SMH: Clear Levels to Monitor
One of the most interesting charts right now is SMH. It held key support and its 100-day SMA and then bounced hard on Monday. That bounce avoided a potential double top pattern and produced a bullish engulfing candle.
This one should actually be fairly straightforward to trade. If SMH starts losing the 100-day SMA again, that would likely trigger a quick move down toward the 200 day SMA. On the other hand, for anyone looking for a dip buying opportunity, a retest of Monday’s candle may be buyable for a quick trade into $407 with a stop below Monday’s low.
If you follow this newsletter closely, you know I was short SMH last week. So why the pivot?
Simple. The short reached its main target at the 100-day SMA and buyers stepped in aggressively. The ETF has now corrected roughly 12 percent and has given us a clear level to base new trades around. If it closes back below Monday’s candle at any point this week, that would likely present another shorting opportunity.
SMH Daily Chart
Reddit (RDDT): Deep in the “Buy Low” Zone
For anyone looking to buy low and sell high, RDDT is definitely in the “low” category right now. The stock dropped about 54 percent from its all time high in a fairly vertical C wave decline.
Ideally, I would like to see one final low, as I would with many charts right now, but that does not mean it has to happen. If we do get that final low, it would likely occur with bullish divergence on the RSI and could set up a move back toward roughly $165 as an initial target.
From a new low, that would represent about 30 percent upside, or roughly 20 percent from current levels. I have been slowly buying in this area while waiting for a potential final flush lower, building some exposure in case the ideal setup never materializes. My ideal buy zone is between $126 and $118.
Google (GOOGL): Support Continues to Hold
GOOGL once again held its key support and simply refuses to break lower. Volume was relatively weak on Monday despite a solid looking bullish candle. To me, it looks like one of two scenarios will play out. Either GOOGL pushes higher into the $330 region for a larger B wave before eventually breaking down into the high-mid $200s, or it breaks down immediately from here and takes out Monday’s candle sometime this week.
I do like GOOGL long term, but I do not love it at these levels. The risk to reward becomes much more attractive closer to the $261 gap fill. If we do get the larger B wave bounce, the chart would also form a fairly clear head and shoulders pattern that could eventually target the 200 day SMA region.
However, the $293 level must break in order for that pattern to activate. As long as $293 holds as support, the stock will likely continue to move sideways or grind slightly higher.
TDRR (Trend, Divergence, Risk/Reward Recap) Jerremy nailed it: Higher (Monday), new low next, then higher again. That new low is my buyable spot, even in a more bearish scenario.
It offers: Tight risk if we break the 200-day and excellent reward to the upside.
Even if this move is just an A wave lower and we get a B wave rally next, a well timed entry near major support and moving averages allows for upside exposure while keeping a very clear level nearby to hedge against. That’s why I like hunting for buys near the end of A waves and around major moving averages. It allows you to manage risk tightly while still maintaining strong upside potential, especially in cases where a C wave never develops.
This chop is brutal, but setups are emerging. Stay disciplined.
