RDW Update: Trendline Break Signals Start of Rally

 A couple of days ago I talked about a potential trade setting up in RDW, and today that setup finally triggered, so I wanted to give a quick update. As I mentioned at the time, I was watching RDW closely for a bounce due to the combination of the channel structure and a cyclical low that was coming due. When those two elements line up, I pay attention, because it often creates a favorable risk-to-reward opportunity.

Today the entry came on a clean break of the descending trendline, which triggered right around the 7.30 area. Once that level was cleared, price responded quickly, confirming that buyers were waiting for that signal. RDW went on to rally to an intraday high of 8.09, which was a solid first move and exactly what I wanted to see shortly after entry.

At this point, I’m expecting the rally to continue for at least a few more days. If momentum stays intact, it’s quite possible RDW works its way toward the top of the channel, which currently comes in around the 9.50 to 9.75 area. That zone would be a logical area for price to encounter resistance, and I’ll be watching closely if and when we get there.

Risk management remains key. My protective stop is set just below 6.80, a level that would invalidate the trade if price were to roll back over. Until then, the plan is to let the trade work and see how much upside the market is willing to give.

For now, the trade is doing what it’s supposed to do. We’ll see if RDW can continue to build on today’s strength as the days unfold.

If you missed it, I outlined the original RDW bounce setup in detail in my previous post

What Happened to TLRY While MSOS Bounced?

 

What happened to TLRY today? That was the question I kept asking myself as the session unfolded. We finally saw a little bit of life in MSOS today, yet TLRY continued to move in the opposite direction. Instead of participating in the bounce, it showed clear signs of relative weakness, and the intraday action made that obvious if you knew where to look.

On the chart to the left, I’m looking at a 2-minute chart of TLRY, with a 2-minute chart of MSOS below it for comparison. Around 1:30 ET, MSOS pushed to a new high on the day. That should have been an invitation for TLRY to at least attempt a higher high of its own. Instead, TLRY failed to confirm the move and printed a lower high. That divergence immediately stood out to me as a textbook example of relative weakness.

When a peer or sector ETF is making new highs and a stock can’t keep up, that’s usually a warning. Sure enough, once minor intraday support gave way, TLRY rolled over and began trending lower for the rest of the session, ultimately closing on its low. That’s not the kind of behavior I want to see when I’m looking to add exposure.

To be clear, this wasn’t easy to watch. I’m actually long TLRY from the summer lows, and my intention has been to add to that position when the conditions line up. Unfortunately, today’s relative weakness clearly told me the stock isn’t ready just yet. The market was giving us information, and ignoring it would be a mistake.

Looking at the daily chart on the right only reinforces that caution. TLRY appears to be working its way toward a gap fill that extends down to the 8.43 area. Today also marked the seventh consecutive session of lower daily highs, which tells me sellers are still firmly in control of the trend.

My game plan hasn’t changed. I’m not interested in guessing bottoms. I want to see TLRY take out a prior day’s high or start showing clear signs of relative strength versus MSOS before stepping in again. Until then, this remains a bounce watch name for me. We’ll see what tomorrow brings.

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MSOS Flashes Relative Strength After 6 days of Lower Highs

 Well, MSOS has finally done something it hasn’t been able to do in over a week, it took out a previous day’s high after printing six consecutive lower daily highs. If you’ve been following along, you know I’ve been stalking this trade and writing about it for several days now, waiting to see if the character of the price action would finally change.

Looking at the market through the lens of relative strength, today offered an early tell well before MSOS pushed through the closely watched 4.87 level I’ve been referencing. On the left chart, I’m looking at a 2-minute chart of MSOS, with SPY plotted in the lower pane for comparison. Around 10:12 ET, SPY pushed down to a fresh low on the day. MSOS, however, refused to follow. Instead of making a new low, it put in a much higher low. That divergence immediately caught my attention.

That’s classic relative strength. When the broader market is making new lows but a stock or ETF holds firm, it tells me buyers are stepping in and asserting control. That’s something we simply haven’t seen in MSOS over the past seven trading days. The tone had clearly shifted. Once MSOS broke above the 4.58 intraday high, momentum picked up and price pushed as high as 4.89 before pulling back, eventually closing the day at 4.71.

On the right, the daily chart shows why today matters. In my opinion, we may have finally turned the corner and started carving out some kind of bottom. Daily volume did tick up slightly, which is constructive, but I’ll be honest, I wasn’t impressed with the close. Ideally, I would have liked to see MSOS finish much closer to the $5 level to really drive the point home. We didn’t get that.

Adding to my hesitation was the action in other cannabis names. TLRY, CGC, YCBD, SNDL, and VFF all showed signs of weakness today. So while the day started with encouraging signals and a strong relative strength setup, the lack of follow-through late in the session left me cautious.

For now, the message is mixed. The early strength was real, but the close leaves questions unanswered. We’ll see how things unfold tomorrow.

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PLTR Turning Bearish: Failed Swing High vs. SPX and Uptrend Line Broken

Looking at the daily chart of PLTR (Palantir Technologies) with the SPX (S&P 500) plotted in the lower pane for comparison, a few things immediately catch my eye. Just the other day, while the broader market pushed to a fresh swing high, PLTR couldn't muster the strength to follow suit, its price stalled and failed to climb higher. That's a classic bearish divergence, signaling underlying relative weakness even if it's not the most extreme one I've seen.
What really has my full attention now though is the more decisive development. PLTR has broken below its recent uptrend line. That line had been supporting the stock's steady climb for weeks. Once it gives way like this, especially when combined with the relative underperformance against the SPX, the technical picture starts to shift.
The pieces of the puzzle are coming together to form a much more bearish picture. The divergence highlights that momentum is fading relative to the market, and the trendline break confirms sellers are taking control at least in the short term. I expect PLTR to move lower over the coming days potentially testing prior support levels if the overall market weakens or even just consolidates. Of course, nothing in trading is guaranteed, but right now the evidence is stacking up on the downside.
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EBAY Shows Clear Relative Strength While the Market Sells Off

 

Today was another great reminder of why I put so much emphasis on relative strength. It’s one of the cleanest ways to identify opportunity when the broader market is working against you. Above is a 5-minute chart of EBAY, and in the lower pane I have the SPY for comparison.

Shortly after the open, the SPY which already opened lower began trending down, printing a series of lower lows and lower highs. That kind of action usually puts pressure on individual stocks. What caught my attention immediately, though, was that EBAY was doing the exact opposite. Right off the open, EBAY started trending higher. While the SPY was making lower lows, EBAY was holding firm and even carving out a higher low. That divergence is a textbook example of relative strength.

When I see a stock making higher lows while the market is breaking down, it tells me that buyers are stepping in and absorbing supply. That’s a strong clue that institutions are accumulating shares. Around 12:30 ET, the SPY made another new low and finally began to turn higher. EBAY, on the other hand, had been consolidating near its highs during that time. Instead of pulling back, it broke out to the upside.

Once that resistance level was taken out, EBAY continued to trend higher for the rest of the session and closed right at its highs. That’s exactly the type of price action I look for, strength first, breakout second, and follow through into the close.

This trade looked very similar to MU, which showed the same type of relative strength earlier and went on to be a big winner. These setups don’t happen every day, but for those willing to slow down and compare stocks to the market, they can provide a real edge. Relative strength continues to be one of the most powerful tools in my trading toolbox.

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