TMAD Weekly: Extreme Call Flow and Buying the Dip

$XLE $OXY $XOM $CF

Hi Traders,

The SPX recently broke below its 200-day moving average and our long-term support level near $649 (SPX 6500). While we did find buyers at those levels, we are now officially in a downtrend across three of the four major indices.

We could see a relief bounce here into the next major resistance zones at 6,537 and 6,565; however, even if those are broken out, we must remain cautious to avoid getting trapped in yet another lower high. A break below 6,495 would likely signal a pickup in downward momentum, opening the door to much lower levels.

NDX Levels

NDX is also on a very strong support and next levels of interest are:

Resistance: 24,200 / 24,050

Support: 23,850 / 22,000

Big move is possible. To either side. Keep it in mind.

We have been warning about overbought conditions and seasonal weakness for a couple of months now, so we hope you have kept some cash on the sidelines. While we will certainly be “buying the dips” for the long term, we aren’t quite there yet. Our ideal levels for going long would be around 6,150- 6000. Market could give us such opportunity considering the less favorable macro factors. We have global conflict that’s not calming down, but escalating, elevated oil prices, rate cuts nowhere in sight and inflation spiking again.

For now, our focus remains on playing momentum and rotations based on our scanner. This has proven to be the most effective strategy this year as we successfully rotated from Tech into Metals, Defense, Defensives, and now Oil.

Let’s dive into the data to see which names are seeing extreme call flow, which are overbought, and which are seeing the strongest bearish flow.