As noted, evidence for a low in the S&P is strong. Friday’s low is at the line that crosses the January and February lows and the LONG TERM parallel (see below chart). Also, VWAP from the 2020 low in SPY held last week (see 2 charts down). 4105 is the initial level to pay attention to but 4270s in the index and 426.00s in SPY line up more significant levels…eventually.
AUDUSD has turned up sharply from the line that crosses lows since August 2021. Also, .6828 is the January 2019 low (flash crash low). Price has reached the 20 day average and the line off of the April highs is just above the market. The rally appears in 5 waves too which raises risk of a pullback. Proposed support is the former 4th wave of one less degree at .6950.
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).
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).
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.
USDJPY didn’t quite make 130 but notice the channel from the 2021 low. 1/2 and full channel extensions are plotted with the channel. The March high was at the 1/2 channel extension. Today’s high was at the full channel extension. Near term focus is on the 1/2 channel extension near 125.30, which was formerly resistance. Near term, watch for resistance near 128.50 (see below). Finally, a volume reversal (on futures) triggered today. This is only the 3rd such reversal since 2014. Those charts are below.
NQ reversed higher from the proposed support zone today. Sentiment is stretched down here too as evidenced by the AA II bull bear spread (see below). Sentiment is stretched just about everywhere actually…bonds…the USD…and equities. So, perhaps the reversal down here in stocks is joined by a reversal higher in bonds and lower in the USD over the next few days…just a thought. Anyway, I’m looking higher in NQ. It’s possible that everything since 2/24 is a massive base but near term focus is on 2022 VWAP near 14500 for now.
It’s clear that the USD won’t roll over until/unless rates stop going up. TLT is the long bond ETF, which moves inversely to rates. So, a turn higher in TLT means a turn lower in rates. This could happen soon because TLT is closing in on a massive level defined by 2 legs down from the August 2020 high (using this high rather than the COVID spike high…the August high is the daily and weekly closing high) at 119.94. It’s also the 25 line within the channel from the 2007 low. This line nailed the 2013 and 2018 lows. Finally, the decline channels. If we do get a reversal then there should be a USDJPY play.
DXY has reached the bottom of the zone cited last week for possible resistance. The line off of the November 2021 and March highs is right up here along with the well-defined horizontal that goes back to 2015. Within the sequence from the January low, wave 5 would equal wave 1 slightly higher at 100.59. Also, DXY is now up 9 days in a row (see below). The last time that happened was at the March 2020 high!