Traders,

Let’s get to work. Tomorrow’s a market holiday, but I’m itching to dive back into this volatility. Here’s what’s on the agenda:

1. TWT’s Market Outlook

2. My Plan & Levels

3. Stocks I’m Watching

By the way, if you have questions or want to run an idea past me, just hit reply. I reply to almost every email, and some of our back-and-forths have been gold. Let’s keep it going.

TWT’s Market Outlook

After a rare bout of volatility, the question on everyone’s mind is: Are we heading into a correction?

Honestly? It’s too early to say. The market’s been balancing ever since rollover, with no new highs or lows this month. Daily ranges have expanded slightly, but this is just a return to normal after the post-election moonshot.

While I tend to lean bullish in these conditions, I’m holding back until I see stronger confluence.

Here’s a tip straight from Casey’s playbook: Watch the flows in leveraged ETFs. While 3x leveraged ETFs are a great way for retail to lose money, institutions love using these vehicles to make short term, speculative bets. This is a big alpha leak, but over the last few months, I’ve been using Casey’s tools to monitor the flows in $SQQQ (which is 3x short QQQ):

Notice how outflows in $SQQQ align with major index rallies? An outflow in a short ETF = bullish signal. Right now, I’m not seeing anything unusual. But the moment big money starts pulling out, I’ll be gearing up for a rally.

So what am I doing in the mean time? Certainly not twiddling my thumbs. I’ve been taking a more short term approach and playing both sides of the volatility. If you want to follow along, I’m live on voice in the Discord three times a week — completely free.

My Plan

For the order flow nerds, here’s what I’m watching:

Above are the volume profiles for the last couple of days. In particular, I’m paying attention to the double distribution on January 2nd. The area between the two distributions and the vPOC — about 5917-20 — is a key support area. In fact, you can see how the red line sticking out of that profile is holding the market up and marked today’s low nicely. This is great confirmation of this area. 

So to the downside, I’ll keep watching this 5917-20 area. Below 5902, I’ll look for a more aggressive sell-off and optimistically target 5817.

Above is the the combined profile from 12/24 and 12/26. Notice the shape? Yep, it’s the same “P” shaped profile I harped about the last time the market sold off. The key levels from the “P” profile I’m monitoring are 6079 and 6103. 

Reminder: These levels were derived during lower-volume holiday trading, so I’ll look for confirmation before entering.

By the way, if you like my chart book and want a copy, it’s available for free in the Discord.

Stocks I Like

$AAPL

This is a short-term play, but as long as the market doesn’t nuke, I’m seeing support for $AAPL around $240-242. I’ll be targeting $250 for some quick gains.

Want More of My Analysis?

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Can’t Wait?

Join the free Discord. You’ll get Adam’s Chartbook, our risk management guide, and live market insights. Sometimes, I even share bot trades when I’m in the mood.

Catch you next week,
Jay