Joe Duarte's Smart Money Passport

Joe Duarte's Smart Money Passport

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Joe Duarte's Smart Money Passport
Joe Duarte's Smart Money Passport
Great Expectations as Rally Gains Ground. Plus a Momentum Monday Bonus Pick.

Great Expectations as Rally Gains Ground. Plus a Momentum Monday Bonus Pick.

Full confirmation of upside reversal may be close at hand.

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Joe Duarte
Jan 16, 2025
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Joe Duarte's Smart Money Passport
Joe Duarte's Smart Money Passport
Great Expectations as Rally Gains Ground. Plus a Momentum Monday Bonus Pick.
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Stocks are exhibiting symptoms of great expectations as they add to yesterday’s gains behind a bullish earnings report from Taiwan Semiconductor (TSM), a stock which we’ve owned in the Weekender Portfolio for some time. The most reliable indicator of the current market’s fortunes, the New York Stock Exchange Advance Decline line (NYAD) is closing in on its 50-day moving average. A decisive move above that key resistance level will likely open up the floodgates and push prices higher. A failure there could lead to more choppy trading.

Image courtesy of colliderimages.com.

There was plenty of fear built into this market, so the short squeeze should not be a surprise. Here is a summary of where things currently stand:

• The CNN Greed/Fear Index is at 31 this morning, still hovering near its recent lows. This remains bullish given the huge jump in the markets.

• The Put/Call ratio hit a high of 1.03 earlier in 2025 before a secondary reading of 0.97 a couple of days ago. The last two market bottoms came with P/C ratios of 1.25 (8/24) and 1.30 (11/24). This may be good enough to mark a bottom.

• The S&P 500 (SPX) and the Nasdaq 100 (NDX) are both testing their 50-day moving averages. As with NYAD, if they move above this level decisively we will likely see a test of the recent highs.

• The New York Stock Exchange Advance Decline line (NYAD, see below for full details) has been forecasting a bounce over the last couple of weeks as each new low has been met with a higher low in the RSI. This pattern has reliably predicted trading bottoms in the past. Most recently in November 2023, a bottom which sparked a nearly one year rally in stocks.

What to do now:

• Stay patient;

• Stick with what’s working;

• Hold onto any position that is not stopped out. And most of all;

• Start deploying money into the market cautiously but decisively focusing on stocks which are exhibiting excellent money flows and bullish chart patterns.

For actionable pointers on contrarian investment and how to find potential winners, check out last weekend’s post on how to assess truly washed out sectors and how and when to build positions in them.

This morning, I am adding one new trade to the Momentum Monday Portfolio.

NYAD Approaches All Clear Signal.

The New York Stock Exchange Advance Decline line (NYAD) is on the verge of giving an all clear signal. As I’ve noted for several weeks, each new low in NYAD has not been confirmed by the RSI, which has delivered higher lows. This means that each downward thrust in the market has come with less momentum. Eventually, sellers run out of gas and the market turns. The final piece of the confirmation puzzle is a move above the 50-day moving average for NYAD, which holds and eventually moves higher.

The U.S. Ten Year Note yield (TNX) seems to be reversing, at least in the short term. It recently tagged the upper end of its yield range at 4.7-4.75%. TNX was overextended here as the RSI has been above 70 on and off for some time. The best scenario is that TNX drops a bit further, perhaps to the 20-day moving average and stabilizes. A consolidation would buy the stock market some time to build on its current upward trend.

Bitcoin (BTCUSD) remains volatile, mired in a tight and uncomfortable trading range as it continues to flirt with the $100,000 area. Let’s see how things develop here. The ADI and OBV lines suggest money is moving back in. We have an open trade in Bitcoin currently.

Thanks to everyone for your ongoing support. I really appreciate it.

Thanks also to all the current Buy Me a Coffee members and supporters. Special shout out to new members who now have access to the Sector Selector ETF Service, included, at no extra charge with your Buy Me a Coffee membership. Two new trades were posted yesterday.

For active trading, short term trading strategies, check out the Smart Money Passport.

For large potential profits with longer term holding periods in stocks check out the Smart Money Passport Weekender Portfolio.

I also appreciate single coffees, which you can buy me here.

If you’re thinking about day trading, my new book – Day Trading 101

– will get you started along the right path.

Trading is stressful and can drag you down. You can feel better if you take the right supplements. Check out our health page.

And if you like this post, hit the Like Button and Share/Restack it. It helps to spread the word.

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