With the big fall in the snp500 index yesterday, what can we expect from the markets today? Another wave of selling or will it reverse? I believe that the big wave of correction will halt for the moment because we have reached an area of congestion in the daily charts. Whether it will hold or not in the future we do not know. But we can expect the wave of selling to start slowing down today. We will also have to check whether the snp500 index will forma 60 min bearish continuation pattern or 60 min bullish reversal pattern.
In the daily chart above, we can see the big picture. Although the drop yesterday was so scary, in the big picture, things still look very very good. We are in a long term bull market uptrend. Therefore any correction will always be an opportunity to buy things at a cheaper price. The trick is always to find a stock that is showing relative strength to the snp 500 index. If the index drops but the stock holds steady and form a continuation pattern then it is good for a trade or invest when the market stabilizes.
Sometimes it is good to look at the lower time frames. The above two charts are the 15 min chart of the index and I have updated it as time goes by. When a stock or index is falling, we need to look at the smaller time frames to see if there are any continuation pattern that is forming. Sometimes the index may trick us into thinking that they will bounce up. But a look at the smaller time frames of the snp 500 or Dow or Nasdaq 100 futures will tell us they are just continuation patterns.
The 60 min chart can so often tell us in advance what might happen to the markets if we pay attention. Rather than just looking at the daily charts, the 60 min charts is a zoom in to what is happening in the market. The market dropped because it went below a 60 min uptrendline and then it crashed drastically. Now that the SPX is reaching a congestion area in the daily charts, we want to be looking for any bullish reversal pattern or bearish continuation pattern in the snp500.
There is always a bull market somewhere. When Dow or the Snp500 falls, what rises are consumer defensive stocks or gold and silver. One can always look for consumer defensive stocks or gold stocks or silver stocks because when investors are fearful of a drop in Dow, they will flock to gold. You can see from the chart above how the Gold went above its 60 min 20 and 50 MA and started a new bull market in the timeframe. There were so many buy setups in the Gold and it provided a lot of hedge for investors.
Oct 30, 18 06:35 AM
As we close out the month of October 2018, what is in store for us? Let us take a look at the charts and see what they might be telling us.
Oct 26, 18 10:47 AM
Technical analysis of US stock market for Friday October 26 2018.
Oct 26, 18 06:23 AM
With the recent crash and sell off one wonders how far Dow Jones can fall. Let us take a look at what the chart is telling us on the possibility of Dow's collapse.
Aug 16, 18 07:28 AM
In this lesson, we will learn how and why BMY manage to bottom out and start a new uptrend.
Aug 14, 18 08:19 AM
In this lesson we will learn and examine why Pentamaster was able to recover all of its losses to start a new uptrend and achieve new highs.