Bitcoin! There aren’t enough superlatives to describe the recent rise. That said, pay attention at this level. Yesterday (first trading day of the year), BTCUSD completed a 2 day volume reversal. This means that the price rallied on significant volume and declined on significant volume the very next day. BTCUSD price history on TradeStation starts in August 2011 so this ‘study’ is in no means exhaustive. Still, the only other 2 day volume reversal occurred at the June 2019. Price is also at the top of an extremely steep channel so I’m on alert for something else besides parabolic rally.
We got the bounce as suspected and Nasdaq futures are approaching proposed resistance near 11415. I’m on alert for a turn lower from that level.
Another month is in the books and SPX continues to trade ‘heavily’ under the its ‘meridian line’. An inside month formed in October. Recall that September was an outside bearish month (see the close up view below). Of note is XHB (homebuilders), which made a monthly volume reversal in October (see below). Is this one of the last segments of the market to put in a top?
I’m treating the area around 11600 as near term bull/bear dividing line for Nasdaq futures. As long as price is below this level, I am looking lower. 10989 is a level to be aware of within the range with broader focus on 10300-10442. This is the 7/24 low and 2 equal legs down from the September high.
The most bearish time of the year for equities is now through October 9th. 9/10 – QQQ pushed slightly above the noted 279 before turning down. The next level of interest is the long term parallel (magenta line) near 257. The chart with volume studies below highlights some important observations. First, VWAP from the high was resistance today. Second, the importance of 237.50 (February high) is magnified by VWAP from the March low.
No change to the 7/7 comments and ‘view’ of reversal risk in the Nasdaq. I’m simply pointing out that NQ made another 8 hour volume reversal today.
Nasdaq futures and QQQ (weekly QQQ is below) covered their closes from 2/21 on Wednesday and closed beneath those levels today. Mistrust of strength has been misguided but the gap fill and down day today at least presents a bearish risk point (Wednesday’s high).
Today may have been a lower high against the 4/17 high. Action since 4/13 has a head and shoulders look to it as well. In short there is no change to looking towards 2616/30 (bottom of the zone is VWAP from the low) in the near term. The chart below shows the current Dow chart with the Dow in 1929. The comparison is anchored with the panic lows. The rallies are similar. If this continues, then price would test the April lows (about 13% lower) before resuming higher. That would be considered the re-test but rest assured that if we did test the April low then most would expect a test of the March low and miss the buying opportunity. The April low in ES is 2424.75 and the 61.8% retrace of the rally from the March low is 2445.50. I think that’s the zone to focus on now.
Today’s ES break confirms the rally from the March low as a wedge. The implication is that the March low will eventually be re-tested. Near term, I’d still watch for a bounce from 2600/30. Proposed resistance is now the underside of the broken wedge line at 2808.
Remember the 4 hour volume reversal on 4/9? ES failed to follow through on that reversal but price is back to that level. 2923/48 wasn’t reached but the rally from the March low consist of 2 equal waves…exactly. So, there is reason to ‘think’ that a countertrend rally is complete. Pay attention to 2770, which is the trendline from the low and VWAP from the February high. A break below there would also leave the rally from March as a bearish wedge, which would suggest an eventual re-test of the low. The next immediate spot to watch then would be 2600/30 (VWAP from the low and recent resistance and support).