Education
May 6, 2022
Today’s Dow move is important because price plummeted from the center line of the Schiff fork that originates at the 2009 low. In simpler terms, this line has been key support and/or resistance for years (note the highlighted areas…zoomed in chart is below). Consider the market in dangerous territory while price is beneath this center line.
May 5, 2022
Violent reversal indeed. I’m of the mind that this rally has legs given the massive 1.0500 figure and extraordinarily bearish sentiment. Upside focus is 1.0840 or so, which is the underside of the trendline from the 2017 low and median line of the bearish fork. Support is 1.0570/90 (see below).
May 4, 2022
SPX held up after yesterday’s reversal. There are 2 big levels to note for possible resistance…4250 and 4360/90. The latter level seems like a stretch in the near term but FOMC is tomorrow and sentiment is wildly bearish, which provides plenty of fuel for a violent squeeze. Bottom line, I’m thinking higher following yesterday’s reversal, especially after futures held the large volume level during Tuesday’s trade (see below).
May 2, 2022
SPX took out the 2/24 low (invasion low) before reversing higher to finish with a high volume reversal (see below). The low was right at the median line of the bearish fork too. Sentiment across virtually all major asset classes is insanely extreme (USD, bonds, and equities). The median line tag and reversal from under the February low is a perfect setup for a squeeze higher. If however price breaks below the median line then the market would be in crash territory.
April 29, 2022
GBPUSD tagged the topside of the trendline from the 2015 high. Again, this line crosses 3 yearly highs. Daily RSI is below 19. Prior readings this low over the last 20 years are shown with magenta dots on this chart and the following 2 charts. The combination of the level and the RSI reading have me on reversal watch. Stay tuned.
April 27, 2022
GBPUSD is nearing the 61.8% retrace of the rally from the 2020 low at 1.2495. The top side of the trendline that originates at the 2015 high (blue line) is just below this level near 1.2415. The next 3 charts highlight when daily RSI is below 21 over the last 20 years. All instances led to at least interim lows EXCEPT during the financial crisis. So, unless this is the financial crisis, we should be on the lookout for a reversal.
April 27, 2022
Heightened bond and FX volatility (notably JPY) has spilled over to equities. SPX is pressing yearly lows and there is no sign of a hold at this point. Price action since September is a distorted head and shoulders top with a negative sloping neckline…very bearish. The measured objective from the pattern is 3724. Barring a miraculous save, 3724-3856 looks like the next magnet. Recall that we started sounding the alarm on a top last September when price was pressing into the long term upper channel line (see below).
April 25, 2022
The Nasdaq is holding on for dear life. Price continues to trade around the well-defined trendline that crosses highs over the last 8 years (see zoomed out chart below). Bigger picture, one must acknowledge that trend is sideways at best and possibly down with price below the 200 day average and that average shifting from a flat to a negative slope. Near term, today’s reversal sets up for a squeeze higher with resistance in the 14300-14500 range. A relief rally is needed in order to relieve extremely negative sentiment.
April 22, 2022
The Dow traded to its best level since 2/10 today before plummeting all day and forming a massive bearish outside day in the process. Scroll out and you’ll see that price has been pressing against a flat 200 day average as well. I’m wondering if this is a larger trend change. It’s safe to say that the broader trend has shifted from up to sideways. If price breaks the long term center line then the trend will be considered down with focus on 29800 or so. The full picture from the 2009 low is below.