Technical Analysis Of US Stock Market April 23 - 27 2018 

With the markets reaching a support area, we might want to be on the lookout for a possible bounce up. However, there is still quite a lot of fear in the markets especially when Apple has drop more than 4% in the previous session. Apple is now at the 200 day moving average and traders will be on the lookout to see if the 200 MA support can help to keep this stock from dropping more.

If Apple slashes through the 200 day moving average, it is very likely to drag the entire market down with it.

April 26 2018 Thursday

April 25 2018 Wednesday

Market is still under pressure and below 60 min 20 MA and 50 MA. If Dow can break above the box then we might have a relief bounce up.

April 24 2018 Tuesday

So I was expecting some kind of a bounce up yesterday, yes it did bounce a bit but eventually it succumb to the pressure from the declining semiconductor sector. 

The double bottom did not had a follow through as it did not break above the downtrend line. But the downtrend line was too beautiful to ignore and usually in this kind of cases, when the index breaks above the downtrend line it will quickly send it higher.

Whether the rise is sustainable we do not know yet but one thing positive is that the main index has broken above a downtrend line and also the 60 min 20 MA and the 60 min 50 MA. This is usually the beginning of a trend change.

The 60 min chart of the Nasdaq 100 futures look quite the same. It was able to break above the downtrend line as well as the 60 min 20 MA and 50 MA promising to us that things might turn bullish today. Perhaps the earnings that is going to be reported by tech companies is positive and this might help to send the tech sector higher and also lift the markets.

What I want to see is for the Nasdaq 100 to break above the horizontal resistance and also the 200 MA. The lows of the recent pivot will act as a reference point for us. We do not want the Nasdaq to drop below it as it will surely set off more selling in the major indices.

Looking at the 60 min chart of SPY, we can see that it is setting up a possible double bottom. The left bottom has a bottoming tail while the right bottom formed a bullish harami kind of candlestick pattern.

I think it is likely to gap up higher today and what I want to see is for it to gap above the downtrend line and trade above the 60 min 20 MA and 50 MA. Hopefully this will be enough to help it resume its 60 min uptrend.

The reference point for us will be the lows of the double bottom. We do not want to see prices trade below it as it will trigger another sell off in the markets.

Apple is getting a bit dicey here. It is quite oversold and it is also sitting at the 200 MA support. We really do not want to see Apple dropping below this important support area as the drop might trigger a sell off down to the 155 area.

The issues with regards to Iphone X sales is really hurting semi stocks as well as tech stocks and if Apple drops below this important 200 day moving average, then we might see a further sell off in the major indices.

The above chart shows the 60 min chart of AAPL. It looks quite weak at the moment and what we want to see is for it to trade back above the 60 min 20 MA. Unless it does so we should stay cautious on Apple. Those who want to buy the dips in Apple should be a bit patient and wait for it to trade back above the 60 min 20 MA.

Semiconductors had a nasty sell off the past 2 trading session. It is getting a bit oversold and just like Apple it is sitting at the 200 day moving average. We certainly want to see support hold and for the SMH to bounce back up otherwise more selling in the semis will happen.

This in turn will drag down the entire markets as well.

Oil has been in the spotlight for quite awhile and for those who do not trade oil futures, USO which is the ETF for oil is a good alternative way to invest or trade oil.

USO started a new uptrend since 10th of April and has been chugging higher since. We will continue to be bullish on USO in the short term as long as it stays above the 60 min 50 MA.

Notice how oil formed 2 60 min boxes for our reference? If USO can trade above the recent box, it will send oil price higher. The top of the previous box is acting as support that hopefully can keep oil prices up. Be careful if USO drops below the 60 min box as it will trigger a short term sell off.

April 23 2018 Monday

Update


Let us begin this week with a look at the bigger picture instead of the usual 60 min chart. We will look at the daily chart of the S&P 500 first.

As you can see, the S&P 500 has been in a volatile trading environment for a very very long time since February 2018. This has put a dent into the account of many investors. 

Despite the whippy movement, the S&P 500 still manages to stay above its rising 200 day moving average. While that is not something to be proud of, nevertheless it still keeps the hope of the bulls alive.

Many technicians and market participants will consider the US market to be in bull territory as long as it stays above its rising 200 day moving average.

The S&P 500 is still struggling to break above a downtrend line. Usually the break of a downtrend line in the daily chart signifies a trend change. Recently the stock market has been in a sideways trading trend. The break above the trend line will give us hints that the market may want to start another nice bullish uptrend in the future.

The important area of support for the S&P 500 will of course be the 2560 area. As long as the S&P 500 stays above here, any sideways movement can just be considered a...well...sideways movement for the stock market to rest. But a full bloom bear market may start if the S&P 500 drops below this important support area.

There is another small layer of short term support in the S&P 500 around 2660 area. And this week we will want to be on the lookout if this short term support area can hold. Otherwise more selling will happen in the stock market which will bring it to retest the previous lows around 2560.

We will now zoom into the 60 min chart of the S&P 500. As you can see, the index dropped to a support area and formed a bottoming tail in the 60 min chart. This helped to give the market a relief rally but we are certainly not out of the woods yet.

To have a really convincing rally up we need to see it break above the downtrend line I have drawn on the chart. There is a possible short term uptrend line as well and if the index breaks below this trend line then we may have more selling in the market.

Some of you may be able to see the 60 min chart forming perhaps a triangle type of pattern at this moment. If it can break higher then it may send the markets higher a bit but if it breaks lower then it will send the markets lower again today.

The chart above is the 2 hour chart of the Nasdaq 100. The entire market started to collapse last week as the Nasdaq 100 broke below the uptrend line. Trend lines are extremely important and we always want to be on the lookout for any break above an uptrend line or downtrend line.

At this moment it is at support and what we want to see is for the support area to hold and Nasdaq breaking back above the short term trend line so it can move higher.

If it can happen then we may have a nice rebound upwards and continuation of the short term uptrend. If that does not happen then the support area which I have highlighted in green will slowly be absorbed and that might send the Nasdaq 100 lower to 6400 and probably lower.

Some clues can be taken from Apple's stock price. The stock had suffered a big sell off last week and this help to drag the markets lower. When Apple sneezes and coughs, it can really bring down the entire market and therefore we should keep watch on this bell weather stock.

What we want to see is for Apple to find support at the 200 MA in order for the markets to rebound higher. Hopefully the 200 MA and price support can help to keep the drop in check. Otherwise we might see selling in Apple down to even the $150 area. If this happens, it will no doubt drag the markets lower as well.

Let's take a look at our intraday guide, the SPY red zone white zone.

As you can see, the SPY was under pressure when it fell into the red zone a few days ago. It also fell below the 200 MA. This usually tells us that overnight longs will not be very good for traders.

The 5 min red zone still tells us that intraday longs are not conducive. But for shorts the red zone tells us that it is favorable to them. So do take into consideration the 5 min red zone white zone when you think of intraday to 2-3 days long or short.

Hope this helps and

Happy Trading and Investing!

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