More insanity ahead! (3 new zones) 11 Feb 2025
It seems as if our tolerance for crazy just got a bit of an upgrade this week.
Just when it seemed we were gearing for another bloody start to the week—what with another round of tariff talks from the White House and all—investors just… shrugged it off.
And wouldn’t you know it, for the first time in weeks, all the major indices actually rallied on a Monday.
But let’s not get ahead of ourselves… because this feels more like an anomaly than a trend.
With Trump just warming up with his plans… With the market still overdependent on Big Tech… With retaliatory policies from other countries brewing…
Things could get worse before they get… better? Worser? Who knows.
What we do know is that market’s immunity to crazy is bound to be tested some more. And that means more volatility ahead.
But as we’re all just passengers in this wild ride, the best we could do is hold on tight and go along for the ride.
And so you don’t get too lost, here are this week’s hot zones to guide you through.
What’s in this issue:
• Who we are
• This week’s three new hot zones
• What are zones?
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’s what our zone scanner flagged today:
Tesla Inc. (TSLA)
Consumer Cyclical • Auto Manufacturers • USA • NASD
TSLA fanboys, look away now.
The stock has been going through a rough stretch lately, down ~10% just in the past week and nearly 30% since reaching an ATH last December.
But yesterday’s dip is what makes it interesting.
On the heels of Elon’s unsolicited $97B bid to acquire OpenAI, TSLA broke through a key support zone.
This was an offer that Sam Altman flat-out shut down, mind you, but trauma from the 2022 Twitter acquisition probably still runs deep. Investors aren’t loving the idea of Elon not having his eye on the ball (or balls).
If the stock continues its downward trend, this could shape up to be a hard-to-ignore short setup, and the way down to the August 2022 zone could net you a solid 10% return.
Rambus Inc. (RMBS)
Technology • Semiconductors • USA • NASD
This is one of those cases where the alert is more important than the zone.
Not saying RMBS’ May 2023 is unimportant… it is. In fact, it’s critical.
But it hasn’t always proven its mettle in past retests.
Over the past year and a half, the zone has been tested numerous times. Sure, the most recent one became a short-seller’s wet dream, but there was a point in late 2024 where the zone has been penetrated more times than an OF model trying to go viral.
We’re still seeing another potential bounce this time around, given the bearish RSI divergence and the declining buying volume…
But the bigger point here is—whether this results in another bounce or penetration—this is not a move to be missed.
A bounce could send RMBS reeling back to the low $50s. A break could bring it back up to ATH levels. Potentially significant gains either way.
Tl;dr: our zone scanner says you’re welcome.
Virtu Financial Inc. (VIRT)
Financial • Capital Markets • USA • NASD
VIRT has been on an absolute tear—up nearly 160% since February 2024.
And it’s doing so despite a bearish divergence that’s been brewing for about seven months already.
It’s all thanks to you—and all the crazy that’s been going on lately.
For those in need of a refresher, VIRT is what you’d call a market maker. They provide liquidity to exchanges so that transactions can always push through.
And they love volatility. The more volatility—from trade wars, interest rate decisions, political chaos, basically any of the staples of cable news—the more they profit.
But right now, VIRT’s back around its April 2018 zone.
And while the zone has been fairly resilient over the last five years, right now it’s showing some weakness.
As of writing, VIRT has penetrated this support.
If this break is confirmed, this joyride could be taking a long detour to the February 2018 zone. A -10% trip down.
BUT, if the stock maintains its near-perfect bounce streak, we could be seeing a quick return to ATH levels, for a decent 7+% profit… or beyond.
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.