Technical Analysis Of US Stock Market February 2019

The month of January 2019 has been one of the biggest percentage move for January since the 1980s if I am not mistaken. The oversold condition plus long term support help to send it higher.

Oil prices have also bottomed and this contributed to the massive rise in January. I believe the month of February will not experience a rise such as in January due to the massive resistance overhead that needs to be overcome. But still the market is not easily intimidated by the resistance.

So we might be looking at a slow drift higher.

February 13 2019

Since the last time I published on the market, the Dow has managed to break above its daily downtrend line. This is a positive development and tells us that the long term bull market is alive and kicking.

There are a few positive things going for the Dow. Some fundamental news are the negotiations between the Democrats and Republicans and also China and US trade negotiations.

On a technical side, the Dow has had a bullish cross, a break above the downtrend line and a recent box breakout. The box will act a short term support and as long as Dow stays above this box then we will continue to move higher.

The move up this past few days happen because the Dow formed a bottoming tail at the top of the box. 

Since there is still resistance overhead, it is likely that if Dow moves up it will be a wavy like pattern. Up a few days and then down. That is acceptable and is good to absorb the supply. The dips like what happened a few days ago are great opportunities for traders to buy the dips.

Looking at the 60 min chart of Dow futures, we can see that it experienced a 60 min ascending triangle breakout and it has more than met its target. Which is why there is some selling.

The previous high support area will be important to determine if we will have a deeper correction or just a sideways trading before going higher. If Dow can stay above the support area, then we are likely to move higher.

Now we turn to our trusty 15 min chart red zone white zone. When SPY is in red, its not a good idea to initiate swing longs. But the past few days have seen it trade back into the white zone. Which is why swing longs are still ok. But do be careful not to enter into swing longs when SPY trades below into the red zone.

February 4 2019

The chart above is the daily chart of Dow Jones futures. As you can see, the Dow is now currently at a downtrend line resistance. Which is why it is struggling to go up. If it can break above this downtrend line, then Dow will continue to go up.

The area to take note is the box I have drawn. Along with a bullish cross, this box tells us that Dow is not intimidated by the resistance. Otherwise it would have fallen down instead of trading sideways.

As long as Dow can stay above the lows of this box, we will be looking at higher prices for the Dow.

Next on our list of positives for the market is the fact that Apple might be starting a new stage 2 daily uptrend. Notice how the stock has bottomed forming a kind of box that I have colored in green. After earnings, the stock gap up above this box.

The top of this box will be support.

I believe that as long as Apple can stay above this box then it will drift higher and because Apple is such a crucial component of all 3 major indices it will have a positive impact on the direction of the stock market.

The above is the weekly chart of SPY.

Take note of the massive resistance that I have highlighted in red. It will take some time to overcome this. Which is why I believe February will probably not experience such a rapid rise compared to January. Supply or resistance areas need time to be absorbed.

The bottoming tail that formed at the resistance area tells us that the S&P 500 is not intimidated by the resistance. Which is good news and if SPY breaks above the downtrend line then things will be positive for the market.

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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