Stock Market Reversal: What Caused It and What Happens Next
We had one heck of a turnaround in the U.S. stock market today. After a strong morning rally with clean trends up the EMAs, the rug got pulled thanks to one unexpected catalyst: a brutal 20-year bond auction.
Most traders don’t even blink at the 20-year, but this time was different. There was a serious lack of demand, and that triggered a waterfall sell-off that took the QQQs down hard into the close. For a market that’s been grinding higher all month, this was the first real test.
So what now?
From a technical perspective, we’ve been riding the 9 EMA on QQQ for a month straight. It was bound to break at some point. One red day doesn’t mean the rally is dead — but it does mean we’ve got to stay tactical. Look for the 500 level on QQQ to get defended. If we flush to fill the gap down near 493, that's where I’ll be looking for dip buys. On SPY, watch the 200-day moving average and the bone zone.
If we get a few more days of pullback and hold the 20 EMA, it could set up a killer long opportunity. But if we slice through that 20 and crack under the 200, then the bears are back in town — and this entire rally could be at risk.
Until we know for sure, we need longs and shorts on the list.
Top Long Ideas (if market bounces):
- Amazon: Strong bounce potential at the 200 SMA
- Snow: Clean breakout from a multi-year range
- AVGO: Relative strength and just a minor pullback today
Top Short Ideas (if weakness continues):
- HIMS: Extended and fading in after-hours
- NBIS: Tweezer tops forming — short on breakdown
- Tesla: Flag breakdown potential below 9 EMA
- QBTS Bearish engulfing candle with room to fade
Final Thoughts:
Don’t be a hero tomorrow. Let the market show its hand. If we bounce and reclaim levels, go long. If we fade and stay under key moving averages, load the shorts. Either way, it's a day trade only kind of day.
🔥 Ready to turn this volatility into opportunity?
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About the Author:
Kunal Desai is the founder of Bulls on Wall Street and a full-time day trader. He’s coached over 7,000 traders and is known for his no-BS trading style. You can find him trading live every morning in the Bulls chatroom and teaching at night in the Bootcamp.
