Macro chaos (14 Jan 2025)
New zones this week!
We’ve been getting hit with a flurry of macro news left and right.
Last week it was the December 2024 NFP report. This week, it’s 10-year Treasury yield rates and the upcoming CPI report.
So far, all it’s brought the market is a whole lot of fear, doubt, and general twitchiness.
But here’s the thing.
All this macro chaos doesn’t have to throw you off your game. With a structured long/short approach—like using zones—you can spot opportunities no matter what the market throws at you.
And speaking of opportunities, we’ve got 3 new ones for you below.
Let’s dive in.
What’s in this issue:
• Zone recap
• Who we are
• This week’s three new hot zones
• What are zones?
But first, let’s revisit…
Our previous zones
Every week, we highlight stocks nearing or entering Hot Zones, i.e. key levels with favorable risk-reward setups. Subscribe to stay updated!
Missed last week’s zone alert? Here’s a quick recap:
Waste Management, Inc. (WM)
This stock had a lot of things going for it when our scanner first picked it up:
It was at the June 3 zone which was ripe with reversals
It entered the zone at an oversold RSI
Its earnings estimates looked positive
So where are we currently with WM?
Despite the recent slew of red market days, the stock has maintained its bounce, and is now crossing the February 28 zone. If momentum holds, this could push toward the first target up, which is the July 19 zone.
Additionally, we would like you to turn your attention to one potential WM play whose entry and exit prices were precisely marked by our zones:
If you were able to time this properly, congrats on a quick 5% gain.
Amgen, Inc. (AMGN)
Similarly, AMGN has managed to maintain some semblance of optimism even with last week’s bloodbath.
Yesterday, it finally broke out of its July 2020 zone with a strong green candle. This opens the door for a move toward the next key zone: the strong resistance at 273-276.
But if this bullish momentum continues, the November 8 2022 zone remains a realistic take-profit target.
“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!
Here are some of the most promising stocks our zone scanner flagged today:
Salesforce Inc. (CRM)
Technology • Software - Application • USA • NYSE
First of all, allow us to add some context to CRM’s November 2021 zone:
This zone acted as a double-top resistance, causing pullbacks of roughly -59% and -33% when price approached it.
Moreover, it required a whole lot of buying volume to break through this resistance, with RSI hitting 83 on the date of penetration.
This is only the second time it will be tested as a support (the previous retest triggered a 9% gain)—and the first without being in overbought territory.
This could be a good rinse-and-repeat setup, with a possible first target being the November 12 zone.
The Kraft Heinz Company (KHC)
Consumer Defensive • Packaged Foods • USA • NASD
Yet another strong support we’re seeing here.
KHC is currently on its May 2020 zone—a zone that has not only remained celibate since its inception, it has also very strongly rejected each and every penetration attempt in the past. These rejections have led to 28% and 56% bounces.
After more than 4 years, its virginity was once again tested—and it has so far confirmed that it is indeed still a prude.
With incredibly strong valuations—better than its historical averages, its sector peers, and the broader market, it won’t be surprising if this attracts institutional buyers.
In the shorter term, yesterday’s bounce could serve as a catalyst for a climb back to the March 2019 zone—offering a roughly a 10% gain.
NextEra Energy, Inc. (NEE)
NEE has all the makings of a good zone play:
It’s on top of a very old, very strong support. RSI is at a paltry 24. Every retest of the zone has resulted in sharp bounces…
Its most recent retest, despite two consecutive days of strong selling volume, ended with a red hammer…
With the next target up being the zone above, which could net a potential 8-14%.
(Or at least as close to perfect as it gets.)
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.