Market Milestones: Decision Time

After a week filled with big ups and downs, Thursday brought a whole lot of indecision, setting the stage for a potentially explosive Friday. SPY is sitting at key support after essentially filling Monday’s retest gap. The 200-day SMA swatted the bulls harder than LeBron James blocking grade schoolers, sending hopes of a V-shaped recovery crashing back down. A lot of traders, myself included, locked in gains at that 200-day SMA, and the straight ballers among us grabbed a bunch of puts at that level.

Now that price has come back down to the very solid $565 support, there are some decent risk-reward setups on the bull side once again. Last Friday’s candle remains key for risk management—below that opens up a lot of bearish possibilities, and you’ll want to be protected if those start playing out.

Bear Case

Looking at the chart, the big gray boxes represent measured moves and outline what could be the “worst-case” scenario for bulls on this immediate leg lower. If the 200-day SMA marked the top, a C wave equal to the A wave would take us exactly to the 100-week SMA at $512. If SPY closes strongly below last Friday’s candle in the next few days, even the most bullish traders should consider this as a possibility. That said, even if SPY breaks last Friday’s low, strong support at $540.00 should at least provide a short-term bouncing spot.

Bull Case

On the bullish side, SPY needs to hold last Friday’s low and push back above the 200-day SMA. This would complete a C wave higher (in green), as the market continues to move in three-wave patterns in all directions. If that happens, shorts would likely scramble to cover, triggering a bit of a short squeeze. If SPY can reclaim the 200-day SMA, it should move quickly to the 100-day SMA, where it will hit resistance once again. If that happens, taking profits at that level would be a smart move for any positions entered near these lows. This setup is also present in key stocks like AAPL, AMZN, NVDA, META, and TSLA, offering strong risk-reward potential into the 100-day SMA.

SPY

Sentiment still remains in the gutter, with the Fear and Greed Index hovering near extreme fear at 28. The number of stocks in the Nasdaq above there 200-day SMA is at 37, the lowest its been since October of 2023. The bullish action on Monday and Tuesday wasn’t enough to shake out shorts triggering a squeeze higher or to start shifting sentiment back to neutral. Tariffs, debt, recession fears, and inflation are all fueling volatility, which is likely to persist in the near term.

Many stocks, especially the Magnificent 7, are sitting right at key support, waiting for a catalyst. April 2nd, dubbed “Liberation Day” by President Trump, could be just that. I suspect it may act as a price reversal catalyst, whichever way we’re trending into the announcement. Good news often turns into a “sell the news” event, and in this case, perceived bad news could actually spark a short-term bottom—especially if SPY sells off into the event and tariffs are less harsh than expected. However, keep in mind that all new tariff announcements have sent the market cliff diving for the past month, and that may not be changing any time soon. If tariff concerns disappeared tomorrow, I think the markets would be back at new all-time highs within weeks. 

We are going to look at two charts now, perhaps the two charts I look at most, Bitcoin and Nvidia.

First up, the Bitcoin chart. Bitcoin has been holding above the 200-day SMA all week, showing impressive relative strength compared to the equity markets. This kind of resilience is exactly what I want to see. BTC needs to hold its 3/11 low, but ideally, it should hold above $80,000 on any further weakness.

That said, if SPY follows the bearish count outlined above, it’s hard to imagine Bitcoin holding up without breaking down as well—especially considering the massive influence of ETFs. When stocks sell off, people tend to ditch their high-flying Bitcoin ETF positions, knowing that BTC has a history of drawing down 60% or more in bear markets. However, with many stocks looking like they could be finding support and the potential for a bullish SPY scenario, Bitcoin could be setting up for a breakout to new all-time highs. That would make for a fantastic trade for anyone buying this recent dip.

Even now, the risk-reward setup is solid. The downside risk is about $10,000 from $85,000 to $75,000, where a stop or hedge would make sense. Meanwhile, the upside is around $30,000 into $116,000, which would only be 7% above the previous all-time high—likely a conservative target if BTC truly starts running. As I’ve said before, this isn’t the market to chase—it’s the market to buy as low as possible, even when it feels uncomfortable. Resistance will be tough at $92,000, $94,000, and $100,000, so even if BTC pushes higher, don’t expect smooth sailing to "Gainsville."

BTC

Now, onto Nvidia. NVDA has been showing real weakness, breaking through multiple key levels: its bullish trendline, 100-day SMA, and 200-day SMA. Recently, it even rejected off its former trendline and continued lower. The last major support sits at $111, which NVDA barely held onto Thursday. If it starts closing below that level, the probability of a move back into double digits increases, marking an incredible buying opportunity.

Right now, NVDA has a PE of 37 and a forward PE of 19. If NVDA drops another 15%, those valuation metrics will look even more attractive for a long-term position. Realistically, NVDA—and many of its fellow Magnificent 7 stocks—already appear undervalued when compared to some of the other largest U.S. companies. Check out the graph below for a breakdown of some of our favorite names.

The TL;DR on this chart: NVDA looks like a screaming buy if it ever reaches the 100-week SMA. In a prolonged bear market, it could drop all the way to the gap fill at $68.87, but I believe NVDA will be a $4 trillion company before 2030. That means a buy near the 100-week SMA could offer at least 85% upside in the coming years. Of course, risk still needs to be managed—if it drops below $68, it’s time to protect and hedge because something is up. Otherwise, I’ll be a buyer if we see a breakdown into strong support.

NVDA