Using the 13-Day Moving Average as a Roadmap in RDW

 

What a nice rally RDW has put together over the past couple of days. Above is a daily chart of RDW along with its 13 simple moving average of the lows. This is a moving average I’ve been writing about for weeks now, and it continues to work well for me. I like its responsiveness and more importantly the way price consistently reacts around it.

If you look back on the chart, you can see how clearly this moving average has acted as both support and resistance in the past. When price has been below it, rallies have often stalled there. When price has been above it, pullbacks into the average have tended to attract buyers. That kind of behavior is exactly what I want to see from a tool I’m using as a decision-making reference.

A few days ago, RDW once again tested this 13-day moving average of the lows. At the time, the stock was under pressure, but instead of breaking down, it found support right where I would expect it to. Since that test, we’ve seen a sharp and decisive rally, confirming that buyers were waiting at that level. When a stock respects support like that, it usually isn’t random, and it’s something I want to stay aligned with.

Now let’s look at the chart on the right, which is also a daily chart of RDW but zoomed out a bit more. Notice where price stopped on Friday, right at the prior gap fill. That gap fill represented a logical area of overhead supply and a natural spot to take profits. That’s exactly what happened, and I took some off the table into that strength.

That said, I’m still holding a small long position because I’m positioning for a potentially larger move. I’m not in a rush to add here, though. Price is currently a bit extended above the moving average, and I’d rather be patient. My plan is to look for a pullback as the moving average catches up to price. Once it does, I’ll be watching closely for signs of support and a potential long entry.

As long as RDW continues to respect this moving average, it remains my roadmap for managing this trade.

For more analysis and market insights, visit my homepage 

TSLA Holds Weekly Support While Relative Strength Hints at a Turn

 

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Above is a weekly chart of TSLA along with its moving average, and on the right we have a daily chart of TSLA with the relative strength line in the lower pane. I want to start with the weekly chart because it provides the bigger picture and, in my opinion, the most important context right now.

Notice how this simple moving average of the lows has acted as support for TSLA numerous times in the past. Each time the stock pulled back into this area, buyers stepped in and price rebounded higher. This moving average has clearly been respected over time, which is why it continues to matter. This past week we saw TSLA once again test that same average, and importantly, the stock managed to close the week in positive territory. That tells me support was respected yet again, and whenever that happens, it immediately has my attention. The market is telling us that buyers are still willing to defend this level.

Now let’s shift over to the daily chart on the right. From a pure price perspective, TSLA has been in a downtrend, making lower lows and lower highs. There’s no debating that. However, when I look beneath price at the relative strength line, I start to see something interesting developing. While price has continued to struggle, the ratio line has actually pushed to a higher high. That kind of divergence can sometimes be an early sign that downside momentum is waning and that a potential change in trend could be setting up.

That said, I don’t trade based on anticipation alone. Relative strength is a great clue, but price still has to confirm. Right now, TSLA remains below its most recent pivot high at 454.30. As long as price stays below that level, the downtrend is technically still intact. For me, the trigger would be a move above that pivot. If TSLA can take out 454.30, that would suggest a higher high is finally in place and that some kind of intermediate bottom may have formed.

If that happens, I would expect higher prices in the weeks ahead. Until then, patience is key. I’ll be watching closely to see if price can confirm what relative strength is already hinting at. Let’s see how things play out next week.

For more analysis and market insights, visit my homepage 

Relative Weakness in NFLX Persists

 

The relative weakness in NFLX continues to stand out, and today was another good example of why I’ve stayed cautious with this stock. While the SPY pushed higher and made a new high on the day, NFLX closed lower. That type of divergence is exactly what I pay attention to. Above is the daily chart of NFLX, and in the lower pane I have the SPY for comparison. When the broader market is moving up and an individual stock can’t keep pace, that’s often a warning sign.

I’ve been talking about this relative weakness since early December. Back then, the market was still in a strong uptrend, but NFLX was already starting to lag. On December 4th, I laid out why I was bearish and why the action in NFLX was something investors shouldn’t ignore. Since that time, we’ve seen the stock sell off, confirming that early warning. Relative weakness doesn’t always play out immediately, but when it persists, it usually matters.

Now we’re back at another interesting spot on the chart, and in my view, another potential setup for a short. Today NFLX printed an inside day, meaning the entire trading range stayed within yesterday’s range. On its own, an inside day can mean consolidation, but context is everything. The key is that this happened while the S&P 500 made a higher high today. To me, that’s another clear sign that NFLX is underperforming and that sellers are still in control.

The level I’ll be watching very closely is yesterday’s low at 81.93. That low also happens to be the earnings day low, which makes it even more important. If that level gives way, I think we could see some further downside unfold fairly quickly. As long as NFLX continues to lag the market and fails to show any real relative strength, I remain skeptical of the upside.

For anyone who wants more background on why I turned bearish in the first place, I’d recommend going back and reading my original post from December 4th, Relative Weakness in NFLX You Can’t Ignore.

Quiet Day, Quiet Strength in Cannabis Stocks

Another quiet day for the cannabis stocks, but I’ll take quiet with a slightly green close over the alternative. We managed to finish marginally higher, and at this point in the month, that alone feels notable. With six trading days left on the calendar until the end of January, you would think we’d have heard something by now from Pam Bondi regarding the final steps on cannabis rescheduling. Assuming she follows through and wraps things up as requested by Trump, the announcement could really come at any time. Until then, the market continues to wait and waiting markets tend to drift.

Even on slow days like this, I’m always looking for clues under the surface. Today, two names stood out to me: TLRY and CURLF. Neither made any big headlines, but technically they’re sitting right at key support levels, and that’s where my attention usually sharpens. What caught my eye was the action right at the open. In both cases, it looked like buyers stepped in almost immediately, defending those levels before things had a chance to slip lower.

When I flipped down to the ratio lines in the lower pane, the picture got a little more interesting. Both TLRY and CURLF showed a slight upturn versus MSOS, which tells me they were beginning to outperform the broader cannabis ETF, even if only modestly. That kind of relative strength doesn’t mean much on its own, but it’s often how early moves begin quietly and without much attention.

Volume, however, was nothing special. It came in about average, so we don’t yet have that extra confirmation I like to see when a real move is getting started. Still, the fact that support held and buyers were willing to show up at those levels is something I don’t want to ignore. In beaten down groups like cannabis, rallies often start from these exact conditions: boredom, skepticism, and subtle relative strength.

For tomorrow, I’ll be watching closely for follow through. If these stocks can build on today’s action and volume begins to expand, that would be a meaningful change in character. Until then, patience remains the name of the game but the setup is starting to get interesting. 

For more analysis and market insights, visit my homepage 

RDW Defends the 13 EMA as the Trend Is Tested

 Above is a daily chart of RDW with a 13-day exponential moving average of the lows, and over the past four months this average has done an excellent job of acting as both support and resistance. It’s one of those levels that just keeps showing up on the chart, and when that happens, I pay attention. You can clearly see how many times this moving average has essentially nailed both the highs and the lows during that period, and today was no exception.

Early in the session, RDW pulled back and tagged this 13 EMA of the lows almost perfectly. That level once again acted as support, and price responded the way you’d want to see if you’re leaning bullish. Buyers stepped in, defended the level, and RDW managed to close back above $10 by the end of the day. From a technical perspective, that’s a constructive outcome and reinforces the importance of this moving average.

For me, this 13 EMA of the lows is now my clear line in the sand for the short-term uptrend that began in early December. As long as price continues to hold above this average, I’m willing to give the benefit of the doubt to the bulls. It defines risk very clearly and keeps me from overthinking every little pullback. A decisive close below this level, however, would change the character of the chart and would make me much more cautious in the near term.

That said, it wasn’t a perfect day. I did notice some subtle signs of relative weakness versus the broader market. Around 3:00 ET, when the SPY pushed to a new high, RDW failed to confirm with a new high of its own. That kind of non-confirmation is worth noting, especially in a stock that’s been driven heavily by momentum and sentiment.

Still, as long as RDW continues to respect this 13 EMA of the lows, I’m going to stay bullish and stick with the trend. The chart is telling me where I’m right and where I’m wrong, and for now, that key average remains firmly intact.

I recently highlighted this same 13 EMA in my post “RDW Approaches Resistance as I Wait for a Better Entry,” and it continues to prove its usefulness.