Good is bad, bad is good (Jan 7 2025)
Three new zones!
After a very promising first few days—with the S&P 500 and Nasdaq snapping their losing streaks, a surge of optimism in tech stocks fueled by Nvidia’s keynote, intriguing mergers and partnerships, and some encouraging news for the job market—2025 looked like it might actually be off to a good start.
But nope. We are back in the red.
Because as we’re once again reminded, what’s good for the economy often isn’t great for the stock market.
On top of all this, there’s still a lot of market uncertainty looming: Trump’s tax cuts and tariffs plans, the Fed’s approach to rate cuts, Friday’s jobs report, friggin’ inflation… Literally any one of these could screw you up good.
Still, even in a market like this, there’s always a way to play it smart and make bank.
How? Zones! And we’ve got three hot ones coming your way in a bit.
What’s in this issue:
• Zone recap
• Who we are
• This week’s three new hot zones
• What are zones?
First, let’s look at…
Our last zones
Each week, we release alerts on stocks that are nearing or entering Hot Zones, i.e. areas where there are favorable risk-reward setups. Subscribe to stay updated!
Missed our previous zone alert? Here’s how they panned out:
Amphenol Corp (APH)
Our scanner found APH hovering within its zone at 68-71. With this zone being a particularly battle-tested one, it seemed like pretty good position to enter… with the caveat that it could take a while to play out, given its RSI.
The stock attempted a big breakout on Jan 6—its high even reaching $72.30—but meh volumes that day kept it stuck at the upper edge of the zone.
Yesterday was a different story. While the stock attempted throughout the day to cower back to its support, Buy orders at the upper edge of the zone kept its breakout alive.
And despite a red day for the overall market, APH still closed slightly up, and a move towards the Nov 11 zone is very possible atm.
BUT… should this May 24 zone break, there are ginormous short opportunities that could be in play—with the two March zones being potential targets.
Copart, Inc. (CPRT)
Last we talked about CPRT, it was on the verge of touching a support at 54-56. Sure enough, it dropped that same day, bringing it all the way down to $56.
This means the stock has entered a new support zone with an RSI that—while not technically oversold—has historically led to bounces of 6-10%.
Right now the zone seems to be holding steady, but it hasn’t moved much since.
Something to keep an eye on these next few days…?
“But wait… who are you people and what am I doing here?”
Welcome to Trading Places.
We’re just a bunch of market nerds, quants, and posers who’ve stared at enough charts we dump our portfolios at the sight of a menorah.
After years of convincing ourselves that the lines and shapes we were plotting actually meant something, we finally figured it was time to upgrade our shtick a tiny bit.
So now, we get quant intelligence to do it for us.
We built an algorithm that’s deaf to the market’s siren songs. It cuts through the BS and pinpoints Zones of interest, i.e. places on the chart where actual money comes to dance.
Think of it as a Limitless pill for your stock, currency, and crypto plays—scanning the markets in real-time and determining where the action’s at.
This week’s hot zones!
Which stocks might see action soon? Here are our scanner’s top picks:
Waste Management, Inc. (WM)
Industrials • Waste Management • USA • NYSE
Where to even begin?
Well, as you can see, the June 3 zone that WM recently bounced off has consistently proven to be a reliable area for reversals.
Pretty much the same thing happened here in June, July, and September of last year—buyers showed up at the zone, and it delivered gains of 7-15%.
But something else is up this time around.
For the first time since this zone was established, the stock entered the zone at a significantly oversold level. And that’s not even exaggerating—WM hasn’t been this oversold since June 2022.
Combine that with positive estimates on their upcoming earnings disclosure, and a strong move up could be in the books.
Next target up could be the Jul 19 zone—a potential 10+% gain. But if the stock takes a dive and support breaks, we might see a drop to 176-180.
Amgen Inc. (AMGN)
Healthcare • Drug Manufacturers - General • USA • NASD
You’d think that after snagging an early win in the Regeneron lawsuit, Amgen’s stock would, at the very least, not tank this badly, this quickly.
But alas, here it is now, sitting at a zone it hasn’t seen since May 2024.
Similar to WM, this July 2020 zone AMGN is currently in has shown sharp price rejections over the past year and a half.
Add to that the kicker that during previous visits to this zone, the RSI wasn’t even close to being this low.
If this support is really as strong as it appears, this could shape up to be a very favorable setup.
With the next target up being the Nov 8 zone, going long here could net a potential gain of around 10%.
Nvidia Corp. (NVDA)
Technology • Semiconductors • USA • NASD
Sell the news. They weren’t kidding.
Despite Nvidia’s near-monopoly on good news since lord knows when plus a killer lineup of new releases and partnerships announced at CES 2025, the stock took a brutal 6.2% loss yesterday.
It was even gunning for another ATH just the other day, but now… we’re starting to see it a bit differently.
Since November 8, this ATH zone has seen multiple, big price rejections.
The first potential stop down for NVDA could be the August 26 zone, -6%. Not chump change, but not too painful if you’re still long.
But if this breaks, the next target is the zone at May 6…
30% down.
NVDA bears, we know it took a while… But it could soon be time to bust out those “I told you so’s.”
WTF are Zones, anyway?
Zones are key price levels where the market has reacted strongly in the past—such as sharp reversals or sudden swings.
They’re areas where actual supply and demand met in the past, and likely will meet again.
“Why are these significant?”
Well, it all comes down to three key principles. We like to call them The Principles of:
When I Dip, You Dip, We Dip (aka psychology)
Traders are aware that others are watching these levels (zones) too. With everybody paying attention, this creates a self-fulfilling prophecy where everybody acts in anticipation of everybody else’s actions.
Markets Gonna Market ¯\_(ツ)_/¯ (aka technical factors)
If the first price rejection at the top of a zone was violent, it’s likely that buyers who entered at that level are now holding losses.
But with each retest, the rejection weakens, as there are fewer buyers remaining underwater. This weakens that resistance (or support for all you short-sellers), and could eventually lead to a break through.
Killer Whales (aka institutional plays)
Big players need liquidity in order to place massive orders without moving the market against themselves. So they wait for these zones, knowing a lot of us small fry (retail traders) will come to play.
This allows them to buy low or sell high without causing a lot of waves.
But remember: Zones are NOT guarantees but rather regions of increased probability for market moves. So always, ALWAYS use proper risk management.
Trading Places: Launch coming soon!
Stop obsessively refreshing your charts like it’s your ex’s Instagram.
By combining historical patterns with real-time market data, Trading Places identifies zones and assigns probabilities to each one—helping traders spot potential plays with higher chances of success.
It automates all of the curation, chart-plotting, and alerting for you, so you can actually have a life (or at least pretend to)!
Stay tuned!
Disclaimer: This isn't financial advice. This shouldn’t be news to you.