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The uptrend is still very strong for the Dow Jones, Nasdaq and S&P 500. Currently there are no weakness yet and therefore we should still have a bullish bias. So far, November has been performing as expected and we want to see the major indices continue to break above the consolidation to move higher.
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A very happy December to all of you!
So far this year we have had a great bull run in the Dow Jones, Nasdaq and the S&P 500. I think this is one of the best years for many many investors. October and November gave us a nice bull run up as expected. I did an article titled Why Dow Jones Rose From 22400 To 24000 In Just 2 Months!, if you have time do check it out.
I will be on holiday for the next 2 weeks so, I probably won't be able to comment much on the markets.
The chart above is the 60 min charts of the Nasdaq futures. As expected, as the Nasdaq touches the rising 20 MA in the daily charts, it bounced up. If you look at the 60 min charts, the index formed a double bottom and break above a trend line. This send the index higher until it hit the resistance area.
Resistance areas need to be absorbed. So the rise yesterday helped to absorb some supply which is why it corrected. Right now the Nasdaq is within a triangle which I have drawn in blue lines. We will need to see which way Nasdaq breaks out into. If it can break above the triangle then Nasdaq will very likely move higher and make another round of all time highs.
The chart above is the 60 min chart of Dow Jones Futures. It has been staying above its rising 20 MA, 50 MA and 200 MA for some time which is why it ran up a lot recently. Currently it is forming another reference point for us in the form of a 60 min Darvas box.
If Dow breaks above the box, it will likely to send Dow higher to make another round of record highs.
Well, another trading day yesterday and another record close for the Dow Jones Industrial Average. Seems like there is no stop to Dow's upward march. So when you have an uptrend, it pays to be bullish till the trend changes. Nasdaq and tech stocks and semi stocks had a bad day yesterday. Most of them corrected quite a lot. Its not surprising after such great gains in the past few weeks.
The drop can still be categorized as a correction. The Nasdaq and the QQQ is still sitting at its rising 20 MA. The SMH is sitting at its 50 MA. So far we still consider it to be a healthy correction but things will not look good if they continue to slash below these MAs. But at this moment we should look to see if we can get in for a buying spree. Need to see if the 20 MA in QQQ can hold it and whether the 50 MA in the SMH can keep the semis from dropping.
The chart above is the daily chart of the Nasdaq 100 futures. Well, it really have a nasty red bar yesterday. But as you can see it is correcting to a price congestion area which hopefully will act as a support for tech related stocks. Furthermore, the Nasdaq is sitting at the rising 20 MA. The 20 MA in an uptrending stock or index can be great short term buying opportunities.
So far the uptrend in Nasdaq is still intact. Yesterday's drop is just a small blip in the big picture. Nasdaq is still making higher highs and higher lows and at this moment there is no danger to the end in the bullish trend yet.
The charts above are the daily chart of the QQQ on the left and an intraday 5 min chart of QQQ on the right. Multiple time frame analysis will tell us to focus on the big picture while looking at the smaller time frames for entries and clues to the movement in the longer time frames.
QQQ as you can see is sitting at the rising 20 MA. QQQ was in the red zone (below 5 min 50 MA) most of the time yesterday we told us to avoid tech related stocks or perhaps to short them as well. As it meets the daily 20 MA, we are also looking to see if QQQ can go back into its white zone in the 5 min charts.
If it can go back into the white zone we will see if we can buy a bounce back up. I have drawn an uptrend line in the 5 min chart and if QQQ stays above the trendline then it can go higher. If it drops below the trend line we may have more selling. And if QQQ drops below the low of yesterday's candle, we can expect more selling down to the rising 50 MA of the QQQ.
Seasonality Chart Courtesy Of Stockcharts.com
As we close out the month of November 2017, let us look at the seasonality chart of the Dow Jones Industrial Average. For the month of October and November, it has for the past 5 years been very conducive for the Dow Jones, S&P 500 and the Nasdaq. So far the Dow and S&P and Nasdaq is following its seasonality script.
They have all performed very well in October and November. For December, there is only a 50% chance of closing higher. So we have a 50/50 chance of the major indices closing higher in December. But not to worry, it does not mean the Dow will go down. It just means we now need to really on the trend of the major indices to steer us to the correct path.
I believe if the Dow, S&P 500 and Nasdaq continues to stay above their rising 20 MA and 50 MA, then its very possible the major indices will continue to make new record highs in December and perhaps close the year in a very positive note. From now on we shall monitor daily what the major indices are doing in relation to those trend following moving averages.
The chart above is the daily chart of SMH and the 5 min chart of the SMH. As you can see, the SMH is now sitting at its rising 50 MA. Usually the 50 MA is fertile area for traders to find buying opportunities because stocks and indices tend to find support in its 50 MA when they are in an uptrend.
I was expecting the SMH to bounce up when it hit the 20 MA but it did not break above the consolidation box in the 5 min chart. If it had broken above the 5 min box then it would have had a nice bounce up like the financials. But it broke down and stayed in the red zone most of the time. I remember mentioning in the Telegram group I'm not touching the semis as long as it stays in the red zone.
Well, SMH dropped quite a lot. Some semi stocks dropped 5% to 8% in a single day. But anyway, many of them are sitting at the 50 MA and we shall see this morning if SMH, QQQ and other semi stocks can give us a bounce up short term trade. Notice how I drew a possible ascending triangle pattern in the 5 min chart of SMH above.
We shall have to see which way SMH breaks out today. Hopefully there will be a completion of an ascending triangle bottom and that SMH will break out higher above the pattern.
Well as they say, there is always a bull market somewhere.
Financial stocks has been the darling of the market these 2 days. As it touched the 50 MA, XLF went into the white zone in the 5 min chart and started its massive 5 min uptrend. In just two days, financial stocks had risen quite mightily.
If you look at the daily chart of XLF above (right hand chart) you can see it actually broke above the previous high. This is a sign of strength. The previous high which is made of a congestion area will now act as a support area if XLF drops. Thus, financial stocks may find support as XLF drops to the area.
XLF is currently quite tired in its 5 min chart but it still hovering in the white zone. If it continues to stay in the white zone, it is very likely to continue to move higher today. Support is at $27.00 area.
Despite North Korea and the Kim Jong Un regime firing a ballistic missile and claiming its nuclear development is complete, the stock market barely register any correction or drop. Well, as most experienced traders will tell you, the trend is always your friend. When the trend is up, it will usually resolve to go higher. Some news may cause it to correct a bit but eventually the market will always go where it wants to go.
Today I just want to bring to your attention that the Dow has broken out of a tight consolidation that it formed in the daily chart. If you are my regular readers, you will realize that I mentioned quite often that it is always good to have the Dow make a consolidation. Some difficulty as it makes an uptrend is always good for the major indices.
The consolidation or sideways trading movement offers a period of rest for the major indices. And what is good is that once the consolidation is broken out of, the consolidation will now act as support for any future corrections. Corrections to support areas can also offer good trading opportunities or a place for investors to buy stocks at a cheaper price.
Well, we really do not know how high the Dow can go. A few months ago, the Dow Jones was still in the 21000 area and you would have thought it might not reach 22000. But fast forward to today, Dow is almost reaching 24000. I think one way we can get a possible target is to take a measured move and project it from the breakout of the consolidation. That is a very ambitious target but when an index is in an uptrend you better believe that it is possible to achieve it.
Anyway, the reason why I continue to be bullish about the US markets is that it is still in an uptrend. As long as the trend is up, it is always a good idea to stay bullish.
The chart above is the daily chart of the S&P 500 futures. Well, it is certainly telling us that it wants to go higher. I use a simple 3 moving averages as a gauge of trend strength and since the S&P 500 index is above its rising 20 MA, 50 MA and 200 MA, we should continue to have a bullish bias in the daily charts.
This is a simple way to gauge trend and strength but if you do some homework you will realize that most of the biggest winners in the stock market are stocks that are staying above its rising 20 MA, 50 MA and 200 MA. There is no magic in these moving averages it just that they are some of the most popular MAs that traders use.
The S&P 500 has also broken out of some congestion area. The congestion area will now act as a support for the S&P 500 in the future. There are lots of layers of support in the S&P 500 and the Dow Jones. So in the event of a correction, we can still expect the major indices to find support there and bounce back higher.
Indeed, the path of least resistance at the moment for the major indices is up. So stay bullish.
Today let us have a look at the bigger picture by looking at the daily chart of the Dow Jones Industrial Average.
A swift glance will tell you that the index is in a nice uptrend. This is characterized by higher highs and higher lows. The index moves from the lower left to the upper right hand of the chart. I love this kind of a trend. It is when the Dow is making an uptrend, traders should focus on buying the dips and the breakouts.
I think the Dow has been making a very nice consolidation since early November 2017. Consolidations can be quite frustrating for shorter term traders. But in the big picture of things consolidations are good. Once Dow breaks higher above the consolidation, the consolidation will act as a strong support area in the future.
As long as Dow Jones stays above 23200 and stays above the rising 50 MA, I believe the uptrend will continue towards the end of the year.
With the Dow Jones, Nasdaq and S&P 500 just made record highs, we are still in a very positive territory. The months of October and November are traditionally very good for the stock market and we hope that the market will repeat history and close higher in November.
If you look at the 60 min chart of Nasdaq 100 above, you will be able to see that it is indeed in a very nice 60 min uptrend. Recently it broke above a consolidation box. That is a positive development. As long as the Nasdaq 100 stays above the 60 min consolidation box we should be bullish and hope for more upside moves in the market.
Its amazing how a company that started off selling books online end up with its owner being the richest man in the world. Jeff Bezos' Amazon has propel the billionaire to the coveted title of richest individual on earth. Bezos is now worth more than $100 Billion. Recently the Amazon founder sold off about $1 Billion worth of his stock to raise cash.
Well, 1% of your entire net worth in Amazon is really nothing. Perhaps the cash will be use for other investment purposes or simply as a reward for his hard work. Anyway, if you look at the daily stock chart of Amazon above, you will see that it is indeed in a very nice uptrend.
A stock that is in an uptrend has a chance of going even higher. So I wont be surprised if Bezos continue to be richer everyday. As long as AMZN stays above its rising 20 MA, 50 MA and 200 MA, I believe Amazon will continue to move higher.
Let's take a look at the etf for semiconductors. SMH is in a nice uptrend. Which is why many semi stocks like INTC, NVDA and MU continue to move higher. SMH is really in a very powerful uptrend with it making higher highs and higher lows and staying above its rising 20 MA, 50 MA and 200 MA.
I believe that the stock market will continue to move higher as long as SMH is in an uptrend. After all, when SMH leads, it often tells us that there is more good things to come for the stock market as a whole. So stay bullish as long as SMH is still in a nice uptrend.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
Nov 23, 20 09:05 AM
After breaking out of a downtrend line, the S&P 500 still looks bullish for the near term.
Nov 17, 20 05:26 AM
After the news of Tesla being added to the S&P 500, it is gapping up pre-market.
Nov 09, 20 06:56 AM
After the elections, the S&P 500 is now breaking out of a triangle pattern.
Oct 23, 20 08:22 AM
The US stock market seems to point to a Republican victory. It is still in an uptrend and therefore we should continue to remain bullish.
Jul 13, 20 07:44 AM
Here is a technical outlook for the US stock market.