Analysis of what is going on in US stock market as well as highlights of some stocks that are forming significant patterns.
So far the DIA is finding support at its 50 MA. It has been a choppy trading environment this few weeks and that is thanks to the congestion area on the left.
I do think it needs time to absorb the supply that is on the left. Which is why the markets are trading kind of sideways compared to in January and February.
Perhaps a pennant may form or a triangle may form in the DIA. We do not know.
But I believe if the markets can stay above the 50 MA in the DIA, then we will slowly grind higher with time.
Looking at the 60 min chart of SPY we can see how it has been choppier in trading recently.
The smooth rise from March 11 onwards is now over and there is choppy trading with the markets going up and down and therefore a swing trader should be pickier in his or her selection when it comes to finding trading candidates.
I have drawn two trend lines today.
If SPY can break above the declining trend line then it will most likely go up. However if it drops below the support area line, then there could be more selling in SPY.
Same story goes for the 60 min chart of QQQ. So do be aware and watch out where the markets want to break out of.
Some stocks to watch.
I was a bit late in uploading this.
Did the analysis and posted it in the Telegram Group Chat. Anyway for those who follow these analysis, here they are. To night I shall try to post them here before the market opens.
Some are charts with the 60 min price about to break above the 60 min downtrend line. As some of you will know when a stock breaks a 60 min downtrend line it can go higher.
The Dow was able to find support at its daily 50 MA yesterday.
Yesterday I drew a 60 min box on Dow futures. The Dow did not drop below the box. Therefore, no heavy selling occur. But it was able to go back above the box and therefore prices go higher.
I can see it back above the 60 min 20 MA and 50 MA. Which is a good sign. There is also a 60 min bullish cross and Dow just broke above a mini 60 min box.
Since it was able to find support at the daily 50 MA, if Dow can stay above that mini 60 min box then it is likely that prices will continue to move higher.
Do remember that the Dow also formed a bottoming tail at the 50 MA. Therefore, this could be a catalyst for it to move higher. We just don't know how high it can move since there is still lots of resistance on the left.
So it won't be surprising that Dow will continue to meander in the Daily chart.
I think there is a lot of fear in the markets especially with news that the inverted yield curve has happened. But we still need to look at the trend.
Dow may be a bit weak but if we look at the Nasdaq we can see that it is still in an uptrend. It is still above its rising 20 MA and 50 MA and this is still a picture of strength in the daily chart.
There is support below which I have drawn a horizontal line.
And it is my believe that as long as Nasdaq stays above this support line and still in an uptrend then I don't think there will be massive selling in the US market. Sure there will be ups and downs but not the kind of massive sell off.
SPY dropped below the lows of its previous trading day. This was bearish but it did not drop a lot but found support at its 60 min 200 MA.
The rising 60 min 200 MA could be a psychological support that keeps SPY from dropping.
SPY kind off traded sideways yesterday and this allowed us to draw a 60 min box for analysis purposes. If SPY drops below the low of the box then we can expect more selling.
If it is able to go above the highs of the box, then I believe we might have at least a 1-2 day rally.
SPY is still below the 60 min 20 MA which is a filter of when it is a good time to swing long or not. The best times to swing long is when SPY is above the 60 min 20 MA.
Sometimes the market just flies of and by the time it moves back above the 60 min 20 MA it might be too late to enter some swings. So, the question of safety or missing out on trades do happen to those who follow a rule or filter.
In the end its best to follow rules and also to follow your own trading setup.
If a swing trade is to be taken, one should really really be very selective as the SPY is still below the 60 min 20 MA.
Sometimes analyzing the stock market can be very difficult as the market does not go up in a straight line!
Anyway, that is where trading strategies come into play. They help you to know when its best to enter or exit a stock. Looking at the general market can help us spot times and areas where it is more conducive to long or short.
In today's analysis I have put in some individual stocks for you to look at.
Yesterday, the Dow Jones futures formed a topping tail.
Topping tail can be scary at times but one should not quickly come into conclusion that the market may fall whenever a topping tail appears.
What this topping tail may mean is that the bulls are getting tired. And from there we need to continue to observe whether further weaknesses may happen.
If you take a look at the daily chart of Dow Futures above, you will see that a possible double top might happen. As traders we need to be aware of possible chart patterns but until they are valid we should not be too alarmed.
Unless the Dow drops below the recent low where the bottoming tail happened, I do not fear a bigger drop in the Dow that is being started by the double top pattern.
Let us now take a look at the 60 min chart of Dow Jones. Since we saw a topping tail in the daily chart, we of course need to go down to the 60 min chart to spot further weaknesses.
Well, the Dow has indeed broken below a 60 min uptrend line. A sign of weakness. If Dow drops below the low that I have drawn on the chart we can expect more selling in Dow today.
Nasdaq is much more stronger than the Dow.
It is when we look at other indexes we have comfort that even though Dow may form a double top there are pockets of support in the Nasdaq. So unless Nasdaq drops below the daily support area, I do not think that there will be a big crash in the market yet.
The daily chart of the S&P 500 above also tells a story that the S&P 500 has support below. The market is still above the 20 MA and 50 MA and thus we should consider it to be still in a daily uptrend.
It is only when it drops below these MAs will we question about the daily uptrend.
After breaking out of a 60 min ascending triangle, the Dow futures is chugging higher.
Its a bit slow but slow and steady wins the race.
Currently the Dow futures is still in a 60 min uptrend. Therefore, let's be simple and continue to follow the trend and be bullish.
Take note of the 60 min chart of S&P 500 futures above, it is still in an uptrend. Staying above the 60 min 50 MA.
The boxes are areas of support and should the S&P 500 correct, you will be able to find support there.
Continue to stay bullish on S&P 500 and the Dow.
Well, after a smooth ride upwards, the US market is now trading sideways a bit in the 60 min chart. This can be problematic because some stocks may not perform that well in a sideways market.
I really do not know which direction it wants to take in the short term. But since it has been trading sideways for 2 days, it gives us a box area for to analyze whether the bull or the bear will win.
Boxes are very useful to gauge how the market is doing.
If SPY breaks above the 60 min box, then I believe the market will go higher. On the other hand, if SPY breaks below the box, then I believe the market may get weaker.
If you take a look at the charts below, you will notice that the markets is on the verge of another breakout higher.
The Dow hourly chart above shows us that it is experiencing a volatility contraction. What this means is the price movement in the Dow is getting less whippy.
Volatility contraction often comes before a volatile move.
So the slowing down of whippy action will eventually be followed by a fast move up or down. Some see the pattern above as an ascending triangle.
Ascending triangle can work both ways.
Either it will breakout or if it falls below the trend line, Dow will fall. Usually the pattern will resolve itself in the direction of the previous trend.
The S&P 500 60 min chart shows us that is consolidating sideways.
A sideways consolidation can be considered a box which it can breakout of or breakdown. Its pretty simple. If the market breaks out of the box, it will move higher.
On the other hand if it breaks down lower below the box the current uptrend in the 60 min chart is questioned. And we might have lower prices.
Today let us zoom out a bit into the daily chart and weekly chart of the S&P 500 futures.
As you can see from the chart above, the S&P 500 has been trading above its daily 20 MA ever since it cross back up above it on a big green candle in early 2019.
The rising daily 20 MA is a signal of trend strength but currently it is challenging the daily 20 MA.
If S&P 500 drops below the 20 MA then a deeper correction might happen. I'm not saying the uptrend will end, its just that we have not have a significant correction since January and if S&P 500 drops below the 20 MA, perhaps it might sell off to the next important MA which is the 50 MA.
The weekly chart of the S&P 500 futures show us that the MACD Histogram and Stochastics is giving us some red flags. The MACD mountain has shortened and this warns of slowing bullish momentum.
The stochastics is very overbought and may even curve down to give a sell signal.
All this can be problematic for the S&P 500. So one should be a bit cautious right now as the risk to reward might not be so beneficial to position traders.
The 5 min chart of SPY above shows how choppy trading is this past few days.
If you remembered I mentioned yesterday that if the SPY breaks below the 15 min ascending triangle then more selling will happen. As it broke below the pattern, it was also in the red zone.
This tells us not to long stocks but to be cautious. Traders can also look to short stocks when SPY is in the 5 min red zone.
The SPY is currently at a support area and we will have to see whether the support holds. If SPY breaks below support, then more selling will happen.
On the other hand, if SPY can break back above into the white zone and above the 5 min box, then it will be conducive once again for intraday longs.
Hope this helps!
Well well, yesterday the market traded sideways a bit.
This tells us that the market is indecisive on which direction it should take. But by today I think it will once again be able to decide where it wants to go.
The 15 min chart of SPY above shows us that the S&P 500 did indeed trade sideways. It formed a beautiful 15 min ascending triangle.
This tells us two things:
If the market can break above the highs of the ascending triangle, then it is like to go higher for the day. This of course provides us with a trading opportunity.
Buying the breakout of the ascending triangle and putting a stop loss at the lows of the pattern is a valid trading strategy.
On the other hand, if SPY drops below the lower trend line, there is a possibility that the market will move lower. Ascending triangle patterns can work both ways. It can help us spot a breakout or a breakdown.
Well, the same story is also happening with the DIA. More often than not, when the SPY creates a pattern, the DIA also almost always create the same pattern though in a bit of a variation.
Perhaps the bullish cross in the 15 min chart might give it a slight bullish bias today. So do be on the lookout for a breakout.
Meanwhile the SMH is trading in a whippy fashion in the 60 min chart. But eventually I think it is trying to form a 60 min triangle for it to breakout of.
Breakout or breakdown we do not know. But of course the bias is always to the preceding trend. In the case of SMH, it is upwards breakout. So lets see what happens and act accordingly.
I'll show you some daily charts here. KMI which is in an uptrend formed 2 bottoming tails in the uptrend. This tells us there is selling during the day but the bulls refuse to give up. You can usually buy the breakout of the highs of the 2 bottoming tails.
If it breaks above the highs of the 2 bottoming tails, it is likely to continue moving higher.
INTC is also in a daily uptrend.
It is above its rising 20 MA and 50 MA and this signals to us a healthy daily uptrend. It also formed 2 bottoming tails although I would say semi bottoming tail. If it breaks above the highs of these 2 bottoming tails then it is likely to continue to move higher.
Hope this helps!
Its been quite some time since I brought in the 5 min buy/avoid chart. Below is the chart. You can use it to know when to buy or sell intraday.
When the SPY is below in the red zone (below 5 min 50 MA) then it is not conducive to buy. Instead you should avoid buying stocks and you can consider shorting the market or stocks.
Yesterday, the market drop into the red zone after about 11am. Then it was all the way bearish till late in the trading day. Right now it is in the white zone so once again you can consider to long stocks.
Sometimes its important to have a filter to know when to long stocks and when to short stocks, I have found that the red zone/ white zone can be very useful to help traders be on the right side of the market during the trading day.
The above is the 15 min chart of SPY. It is making a 15 min cup with handle pattern. If the market can break higher above the handle then the entire market is likely to move higher.
On the other hand, if the market breaks below the handle, it is very likely more selling will continue.
Yesterday, the stock market formed a bottoming tail in SPY.
This is a result of heaving selling and then the market closing back up far from the bottom. While this is not a green color bottoming tail that has the market close higher near the open, nevertheless, it is useful to show us what the market will do.
If the market can trade above the highs of the bottoming tail, then it is likely to move higher. Do be careful if the market trades below the low of the bottoming tail as more selling will happen.
In a way, the US market has just started a new uptrend in the 60 min chart. The Nasdaq and S&P 500 futures are stronger than the Dow Jones.
The above is the 60 min chart of Nasdaq 100 futures. It broke out of a 60 min downtrend line and was able to go higher. Right now, the index is in a 60 min uptrend.
The index is trading above its rising 60 min 20 MA and 50 MA. Usually this is a sign of strength. The box I have drawn shows a consolidation for the index. If Nasdaq can trade above this box then it is likely to break higher. On the other hand some caution is needed if the index drops below the box.
Boxes in 60 min charts are very useful to gauge the short term strength of indexes. An index that is in a strong short term uptrend will break above many 60 min boxes with its 60 min 20 MA and 50 MA rising nicely.
That is what we want to see in the Nasdaq 100 as well as the S&P 500 and Dow futures.
The chart above shows the 60 min chart of the S&P 500 futures. The index clearly found support at its rising 60 min 200 MA. It broke out of a box as a 60 min bullish cross happened and is now trading at its previous swing high that is acting as a support.
If the S&P 500 futures can break above the 60 min box I have drawn, then it is also likely to shoot higher along with the Nasdaq futures.
The Dow futures actually broke out very nicely of a 60 min dowtrend line. But it immediately collapsed and the next day gap up higher. This is very choppy trading and can be nerve wrecking compared to the S&P 500 and Nasdaq.
Sometimes one index can act quite nasty compared to the other. But eventually if the S&P 500 and Nasdaq chugs higher, the Dow will also move higher.
Take note of the rising 60 min 200 MA (in yellow). Well, if Dow can stay above this rising 60 min 200 MA and also stay above the uptrend line that I have drawn, then it is likely to move higher as well.
On the other hand, if it starts to drop below the 200 MA and the uptrend line, it could signal more weakness and choppy trading.
I think the daily uptrend is still intact and there is no weaknesses in it yet. But the short term movements can be choppy.
The chart above is the daily chart of SPY which is the ETF for the S&P 500.
Notice how the SPY is now above the daily 20 MA, 50 MA and 200 MA. The 20 MA (red) is slanting upwards and this tells us that the daily uptrend is strong and intact and alive.
As long as the SPY stays above the rising daily 20 MA, stay bullish!
Yesterday or actually last Friday, SPY formed a small bottoming tail. I think its a bit difficult to see it in this chart but if you zoom in on your own chart, you will see the SPY had a bottoming tail. This tells us it rejected to go lower.
Therefore, if the market stays above the bottoming tail then it is very likely to continue to move higher.
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
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