Join Dstockmarket's Community - Daily Market Analysis, Individual Stock Analysis.
I think the world has wake up to the fact that the Coronavirus or Covid 19 is a once in a century event that will impact the lives of millions and billions of people around the world.
From a health and wealth perspective, this pandemic has impacted us in ways that were unimaginable to many people.
Where will the stock market go from here? Are we going to see more lows in the stock market or has a bottom really formed for the US stock market. We will use charts to guide us to answer these questions.
I will be conducting a live webinar on May 4 2020 Monday 8.15 pm Malaysian time or 8.15 am New York time. For those who are interested please go to the Dstockmarket Telegram Chat Group and put your name on the list.
Today is the last trading day for the month of April.
The SPX has already broken above the box trading area that I have drawn. The top of the box is a support area and as long as SPX can stay above this area, then it is likely to continue to move higher.
As SPX reaches the daily 200 MA, it may find resistance there but some sideways movement at that area might help SPX to ignore that resistance.
Yesterday, the SPX had a great day forming a nice large bullish candle.
Today we want to see if the SPX can stay above the top 1/2 of this candle. If it can, then SPX is likely to move higher.
There might be a fear of the maxim "Sell in May and Go Away". And we also have to take a look at Apple's earnings which will report after today's close.
If AAPL performs badly, it might affect the market.
But I want you to pay attention to the 2 hour ascending triangle in Nasdaq.
This is a continuation pattern and I think that as long as Nasdaq stays above the top of the ascending triangle or the uptrend line, then Nasdaq and the US market is likely to continue to move higher.
Tomorrow we will start a new page for May's stock market analysis.
So see you there.
We had some weakness yesterday in the market but SPX has not break below the green support area.
All 3 moving averages in the 2 hour chart of the SPX is still moving upwards and this gives us a bullish bias.
I think that as long as SPX stays above the green support area, then there is a high probability that it will move higher.
On the other hand, if it falls below the green support area, then we might see it drop to the triangle apex area. That will be a support area to watch.
Many eyes will be on Apple when it reports earnings on April 30 after the market closes.
If investors think that Apple's earnings and guidance is good they will send the stock higher.
What we need to watch is the box that I have drawn. If Apple can break above the box, then we will see the stock moving higher and this will indeed help the stock market to move up as well.
On the other hand, if the earnings causes AAPL to drop below the box, then we might have a correction down to the 200 MA of the stock. This will also have a negative impact on the stock market as well.
Sometime ago I pointed out that the SPX may be forming a triangle pattern and I mentioned that if it breaks out of the triangle, it might go higher.
It has already broken out of the triangle and thus it shot up.
The apex of the triangle will be a support area in case SPX falls and as long as SPX stays above this area, then we have a bullish bias.
For the short term, look at the the small uptrend line I have drawn and also the 60 min 50 MA. As long as SPX can stay above this two, then it is likely that the SPX will move higher today.
The above is the daily chart of the XLY which is the consumer discretionary sector.
As you can see, it has gone back up by quite a lot.
This is a sign of consumer confidence of the economy and this is good for the stock market as a whole.
I think that as long as the XLY stays above the uptrend line that I have drawn, the XLY will continue to grind higher and it is possible for it to meet the old highs.
The appearance of a weekly bottoming tail is a possible indication that the stock market wants to continue to move higher.
The chart above shows the weekly chart of SPX.
If SPX trades above the highs of the bottoming tail, then it is very likely that the stock market will move higher.
As long as the SPX stays above the lows of the bottoming tail, then it is also very likely that the stock market will move higher as well.
The chart above shows, the weekly chart of the QQQ.
It formed a weekly type of bottoming tail. The QQQ closed near the top of the previous green bar. This is very positive and if the QQQ can go above the highs of this bottoming tail then it is very likely that the Nasdaq will move higher as well.
The stochastics is still in railroad track and not reached the overbought level yet. So there is a probability that the QQQ can move higher.
Stochastics is about 50-60% therefore, I won't be surprised if the QQQ makes a new highs or at least meet the previous high in the near future.
But for that to happen we first need to see QQQ trade above the highs of the bottoming tail.
The above is the daily chart of the SPX.
So far we can still consider it to be trading sideways despite of the fact that it has broken below an uptrend line.
Breaking below an uptrend line can often signal weakness but so far the SPX has refused to drop more.
I have drawn a sideways channel in the chart.
As long as SPX stays above the lower horizontal line we can still treat it as consolidating sideways.
Sideways movement is good as it help to absorb the supply in the past. This may also eventually set up a breakout for us.
If SPX trade sideways a bit more and then breakouts of this consolidation, then this will be very good for the markets.
On the other hand, if SPX breaks below the consolidation this will tell us that the markets have rejected to go higher and there might be more sell off in the future.
SPX is meandering in the 60 min chart.
But we can draw two trend lines to connect the highs and low and perhaps it is forming a 60 min triangle.
This triangle can aid us to know what the SPX might do in the short term.
If SPX breaks above the upper trend line, then we might move higher. But if it breaks below the lower trend line, then we might be moving lower.
So far the SPX still manages to stay afloat.
I think it might be forming a cup with handle in the 60 min chart. Watch where the SPX wants to break out of.
If it breaks out above the handle, then it is possible for it to continue to move higher.
On the other hand, a break below the handle might signal weakness and SPX might move lower.
The above is a weekly chart of the XLK.
So far the XLK is still staying above the lows of the previous green bar. Watch carefully if it can stay above the lows of the green bar.
If XLK can move higher and close near the high of the previous green bar, this will form a weekly bottoming tail.
That is a positive and if the next week, XLK trades above the weekly bottoming tail then it is likely to move higher and this will be good for the stock market as well.
We had quite a nasty drop yesterday but it looks like the SPX wants to rebound back up.
The area for us to watch is the green area. If SPX can stay above this area, then it is likely to be able to climb back up or at least continue to trade sideways to absorb the supply.
On the other hand, if SPX drops below the green support area, then we are likely to see lower prices.
Even if the market drops we can take comfort from the fact that the QQQ are reaching an important support area in the 60 min chart.
That important support area will be the 60 min ascending triangle. The entire pattern will be a possible support area and this is where the daily 200 MA and also the right shoulder of a reverse head and shoulder will be.
Therefore, watch this area carefully.
If QQQ continues to drop today but manages to find support from this green area, then we are most likely to see a rebound in the stock market.
I am now not bullish about the SPX anymore as it has fallen below the 60 min 200 MA. Unless it can go back above the 200 MA then it is best to be bearish and cautious of the US market.
The SPX is also challenging the support area that I have highlighted in green.
If it continues to fall below this green area, then the US market is likely to continue to correct more.
Having said that, we might not have a sell off down to meet the previous low.
That is because the QQQ or techs are still very strong.
A very good area to watch is the 200 day moving average which might coincide with the right shoulder of a possible reverse head and shoulder pattern of the QQQ.
Perhaps the QQQ might fall to that area and if it can find support there, I think the market will rebound back up.
On the other hand, if the right should does not hold, then there could be more sell off in the US stock market.
There are 2 things to be cautious of in the SPX.
If you take a look at the daily chart above you will be able to see that it has already met its measured move target.
A measured move target once met may spell some correction even if the trend is still up. The very least is a sideways trading environment.
The other thing to take note is the fact that the SPX is now at its declining 50 day moving average.
The 50 MA is a resistance if the index meets it from below.
These 2 facts tell us that we should remain cautious of a bigger correction.
Just remain cautious. It does not mean that a big reversal might happen but one should certainly expect some weakness.
To be honest I do not know whether this will be the beginnings of a bigger correction or is this just the market trading sideways to absorb the resistance and supply.
Which is why taking a look at the 60 min chart can often give us a clue on what is happening.
The SPX is dropping below the green support area which is made up of a previous high. So if it continues to drop it might fall to the top of the box.
This might offer some support to the SPX and the market.
But if the SPX drops below the box, then we may be in for a deeper correction.
I shall remain mildly bullish on the SPX as long as it is above the rising 60 min 200 MA.
Most of my long positions are still profitable. The ones that I initiated on Friday are deep in the red and well that is to be expected since we are hitting the 50 MA.
But I think I shall continue to remain mildly bullish as long as SPX stays above the box and also the 60 min 200 MA.
Yesterday we saw how a double bottom formed in the 60 min chart of the SPX.
I also mentioned that if the SPX is able to break above the downtrend line then it is likely to go higher. It took quite sometime for it to breakout of the downtrend line.
Then later, it was reported that Gilead's trial drug was effective against the Coronavirus.
This no doubt created hope that finally the Covid-19 could be contained. I think as more and more positive news about drugs and vaccines that may potentially be effective against the Coronavirus comes out, the market may react positively to it.
SPX has broken above a previous high and we shall take that as a support level.
I have highlighted it in green. As long as the SPX stays above this level, it is likely that it will trade sideways and then continue to move higher.
On the other hand, if the green support area does not hold, then we might see some weaknesses coming in.
AAPL is one of those stocks that is closely watched by many.
It is also one of the stocks that have recovered a lot since its low.
You can see that it is trading above its rising 60 min 20 MA and 50 MA and this is bullish. One should remain bullish on AAPL as long as it stays above the rising 60 min 20 MA and 50 MA.
It is forming a 60 min ascending triangle as well.
If AAPL can breakout above this ascending triangle, then I think this will help to lift the market and the market will continue to move higher.
On the other hand, if AAPL breaks below the lower uptrend line, then this will signal weakness and the market may correct as well.
We had a weak day yesterday. But if you take a look at the 60 min chart of the QQQ above, you will notice that the QQQ is still in a 60 min uptrend.
It is still in a definition of an uptrend because it is still trading above the 60 min 20 MA and 60 min 50 MA. Both of them are still rising and pointing upwards which tells us to continue to have a bullish bias.
The 2 day action of the QQQ can be called a consolidation sideways trading.
I have drawn a box to help you see clearer.
This is how it works. As long as the QQQ stays within the box, we deem it to be consolidating. If it breaks out above the highs of the box, then we call it a breakout and this tells us that QQQ wants to go higher.
On the other hand, the box can be used to gauge weakness.
If the QQQ trades below the low of the box, then this will tell us that the QQQ is likely to go lower and perhaps meet the top of the 60 min ascending triangle.
Do note that the QQQ has broken out of an ascending triangle. This is usually a positive development that shows us that the QQQ will go higher.
The top of the ascending triangle will be a support area.
Based on the price action of the QQQ, I think it still tells us to have a bullish bias.
But of course things might not follow the script which is why the top of the ascending triangle along with a lookout at whether QQQ still can stay above the 60 min 20 MA and 50 MA will aid us in gauging the strength of the QQQ.
If QQQ breaks out of the box, a possible target could be the measured move target which I have drawn above.
The above is the hourly chart of the SPX.
It dropped yesterday but I think it may be forming a double bottom. This pattern will help us to gauge where SPX might go from here.
If the SPX breaks above the downtrend line then it is possible that the market will go higher today.
On the other hand, if the SPX breaks below the low of the double bottom, then we will have a pattern failure and this will tell us that the SPX will correct more.
The rising 60 min 200 MA is quite important. Since SPX is still above the rising 200 MA, it tells us to continue to have a bullish bias.
There may be volatility and ups and downs but as long as the SPX is above the rising 60 min 200 MA, then one should continue to have a bullish bias.
Lately, there has been some stocks that are performing very well despite the market still far away from its all time high.
Amazon is one of them. And you can see that it made another all time high.
It is one of the beneficiaries of what I call a "Thematic" play. Or a "if then" scenario.
With the Coronavirus keeping people at home one can always ask what will happen. And if that happens, then which company or stock may benefit?
The "If then" question can be very useful in helping one to spot a great stock if you are on the path of looking for stocks based on themes.
Because of Covid-19, many people are self isolating and staying at home. And when they are staying at home, they will be doing their shopping more online.
And Amazon is one of those online companies that will benefit tremendously.
AMZN has met its measured move target but since the stock is at an all time high and in an uptrend, perhaps it may even move higher and higher.
The previous high will be a new support and I think that as long as AMZN stays above the previous high, then it is likely to continue to move higher.
Another one of the beneficiaries of people staying at home and working from home is the tech company ZOOM. Ticker ZM not ZOOM otherwise you will be looking at another company.
Recently it found support at the 50 day moving average as it got oversold in the stochastics.
The stock moved up and if it breaks above the downtrend line, then I think it is likely to continue to move higher and make another new high.
With more and more people staying at home, they are using online platform to connect with each other. Companies have also used online platform to have meetings with each other.
So companies that enable people to do online meetings will benefit from these.
Yesterday I showed you how the QQQ is setting up a 60 min ascending triangle. It broke out of it and the markets indeed have a very nice rally yesterday.
Today, the market may be going lower and have weaknesses.
I think the reason is that the SPY is getting a bit overbought.
And from the chart you can see that it is at 93.70 in the stochastics. That is overbought and there might be a bearish cross in the stochastics.
It does make sense to respect the overbought situation. Let's hope that the market will ignore the overbought signal and continue to move higher.
Do note that the SPY has risen a lot and it is also about to meet the declining 50 MA.
So this could set up a bearish mindset in the minds of market participants.
One thing to take note is the rising uptrend line. As long as SPY is able to stay above the uptrend line then we just accept the fact that SPY needs to trade sideways or correct a bit to absorb the supply of resistance.
It is normal for the markets not to rise in a smooth way after a sell off.
On the other hand, if SPY drops below the uptrend line then this could be a signal of weaknesses and we should be cautious of this situation.
SPY could then drop to the handle support. And as long as the handle support holds then, SPY will bounce back up and continue to move higher.
If you are wondering what the handle means, its just that SPY formed a cup with handle variation and it has broken out of the handle.
The chart above is the 2 hour chart of the SPX.
Notice how it is making higher highs and higher lows. This is something positive. Right now it is sitting at the green support area and if it can stay above this area, it will reverse back up and resume going higher.
I have also drawn a short term uptrend line. This will act as a gauge of short term strength for the SPX. As long as SPX stays above this uptrend line, then we will continue moving higher.
SPX will continue to make higher highs and higher lows.
On the other hand, if SPX drops below this uptrend line then it will mean more weaknesses and we will need to see if SPX can find support at the 2nd support area.
If 2nd support area does not hold, then we will have more correction in the SPX.
The SMH or semis sector has broken above its daily 200 MA and 50 MA. This is a very positive sign.
And if SMH can continue to stay above this 2 moving averages, then we will continue to see the semis moving up and also bringing the market higher with it.
Watch the uptrend line I have drawn.
Same thing with the SPY, as long as SMH can stay above this uptrendline, then we will continue to see more bullishness in the SMH.
If it cannot, then we will see more weaknesses and next we will have to see if SMH can find support at the previous high.
A very important development that the markets have made is the fact that QQQ has retraced more than 50% of the sell off. It is at the 61.8% of the Fibonacci Retracement level and this shows the bulls are in control.
The SPY has also gone back above the 50% retracement. You can look at it yourself if you have time.
From history, if the markets can go back up 50% of the sell off, it is very very likely to continue to move up and start a new bull market and even make new highs.
The important area to watch for the QQQ is the 50% area. As long as QQQ can stay above this area, then it is very likely a new bull market will start and we will see new highs in the stock market.
If you take a look at the hourly chart of the QQQ above, you will be able to see that the QQQ is forming a 60 min ascending triangle.
Ascending triangles can be continuation patterns that inform us that the stock or index wants to continue to move higher.
Futures are up and it is very likely that QQQ might gap up above the top of the pattern today.
As long as QQQ stays above the top of the 60 min ascending triangle, then it is very likely that QQQ and the entire US market will continue to move higher.
The ascending triangle pattern can also be used to gauge possible weakness.
If QQQ drops below the lower uptrend line, then this will mean pattern failure and it will mean weakness and lower prices.
Another thing to take note from this chart is that the QQQ is now above its 60 min 20 MA, 50 MA and 200 MA.
They line up quite well with the faster moving averages above the slower ones. Meaning the 20 MA is above the 50 MA and these two MAs are above the 200 MA.
This is a picture of strength and that is why if QQQ stays above the top of the ascending triangle then it is very likely that the QQQ and the US market will continue to move higher.
The above is the daily chart of the S&P 500 futures.
If we take a measured move target, it is very possible that S&P 500 will reach the declining 50 MA.
If you have watch the video I showed you yesterday, you will know that the indexes are actually making a cup with handle pattern.
The top of the handle will be important as it will act as a support.
I have highlighted the area in green. As long as the S&P 500 stays above this area, then it is very very likely that the index and the US market will continue to move higher.
Today I will be doing something different. Instead of the usual written form, I have done a video analysis. Its a bit long but I think it still packs quite some useful information for you.
I will be looking at SPY, DIA, QQQ, SMH and some other stocks like AAPL, MSFT, GOOGL and also GRMN.
If the video below is too small, click on the YouTube link on the video to view it on YouTube.
Let's take a step back today and look at the SPX from a bird's eye view.
The above is the daily chart of the SPX.
First of all, I would like to point out that the SPX has made quite a remarkable recovery. It has move up more than 20% from its low.
This is a definition of the beginnings of a bull market.
Secondly, the SPX has broken back above a daily downtrend line. The purple line is the downtrend line that I have drawn. When an index breaks above a downtrend line this could be a sign that a trend change is happening.
In the case of the SPX, the break of the downtrend line tells us that it wants to change from a bearish trend to a bullish trend.
Notice how the SPX also made a cup with handle pattern.
The cup with handle pattern can often be the sign of a bottom. What we really want to see is for the SPX to stay above the highs of the handle.
If it is able to do so, then we can be very confident that a new bull market has emerge and the stock market will grind higher.
Of course there are no certainties in the stock market. The SPX could correct and have another leg down as well.
We should be prepared for that possibility as well.
Which is why I have drawn the red color uptrend line for you to see. This is a shorter trend line compared to the purple uptrend line.
If SPX breaks below this red uptrend line it could signal a slowing of bullish momentum and possible weakness and correction.
But as long as it stays above this and also the top of the cup with handle pattern, then I'm pretty sure that the stock market will continue to rise.
Having said that, I have pointed out the 50 day moving average and the 200 day moving average. Both of them are declining.
And what this means is there will eventually be resistance that will be caused by the presence of these 2 moving averages.
If SPX reaches these 2 moving averages do expect resistance.
The conclusion of this chart is this. One should stay bullish but should not expect a very smooth ride upwards.
Now I would like to show you the 2 hour chart of the SPX.
After breaking out higher, the SPX is now forming a possible double top. And if SPX breaks below the uptrend line that I have drawn, there is a possibility of weakness in the market today.
That is to be expected as there have been too much selling in the past. So any rise back up will eventually be met with quite a lot of selling.
We should not expect a smooth ride up back more of an uphill and correction kind of wavy rise.
The green support area should be our focus point as well. As long as SPX stays above this area in the event of any correction, I believe that the SPX will continue to drift higher in the near future.
But if it falls below it then we might have more weakness and possible lower prices.
Well, the SPX and the US stock market really had a very very nice rally these few days.
After making a 60 min bullish cross and breaking above a 60 min ascending triangle, the market shot up nicely.
It is of course natural that after such a drastic rise that some correction is inevitable.
That is because we are still in the early stages of a new uptrend and that is normal.
The green area, is a support area that I have highlighted. From the chart, we can see that this green area is actually a previous high.
What we can see from the chart is 2 previous highs and this may be a good area of support for the SPX and the market.
If SPX is able to stay above this green support area, then I think the SPX will continue to move higher today or by tommorow.
On the other hand, if SPX cannot find support from these two previous highs then we may see weaknesses and more correction.
You may have observed that many stocks opened higher only to move back down without much gain.
Even the QQQ experienced this. It gapped up higher then it collapsed back down to have a small loss of 0.04%.
I think the reason for that is because QQQ approaches the 200 day moving average. The 200 day moving average can be a very strong resistance which needs time to overcome.
The 50 day moving average can also be a resistance and QQQ might meet this resistance and this will make it hard for the QQQ to move up as well.
The green area which I have highlighted is a previous swing high which can act as a support.
I think as long as QQQ stay above this green area, then it is likely to drift sideways and move higher.
We can also take the uptrend line that I have drawn as a guide to whether the QQQ and the market may collapse further.
Sure we do not expect a smooth rise upwards in the market.
But as long as QQQ stays above the uptrend line, then we are safe and I think the market will continue to drift higher in the future.
Things have been really choppy this past few weeks.
Many bad news about the Coronavirus are piling up and the stats seem not to slow down that much. But the market thankfully has not drop below the green support area that I have drawn in the 60 min chart of the SPX above.
Perhaps the market has really bottomed and have priced in all the troubles that the Coronavirus gives.
There are still some that believe that we may have another leg down as the number of jobs are being threatened by this Covid 19.
Watch the green support area.
I think that as long as the SPX is able to stay above this green area, then we will meander sideways and eventually move higher.
On the other hand, if the SPX cannot stay above the green support area, then we may indeed see another leg down to the previous low.
Today the futures moved higher as it broke out of a 60 min ascending triangle. The top of the triangle could be a short term support and if SPX can stay above the top of this pattern, then we could continue to move higher today.
The chart above shows the daily chart of the SPY which is the ETF that tracks the S&P 500.
It is still struggling to move above the 20 MA.
If SPY can break above the downtrend line and also the daily 20 MA , then this will be an early signal that SPY is changing trend.
A break of a daily downtrend line can often tell us that the index has bottom and changed from a bearish trend to a bullish trend.
The markets may be volatile, but let the charts guide us.
I mentioned in my last analysis in March that I will write about the US stock market the next day. But my apologies for that. Those who follow me closely will realize that I did not write for 2 days.
My hope is that I am able to write each day. But since I do not charge anything for this analysis ( I do this as a help to others and as a hobby and interest) do expect me not to write each day. I also do not have the need to have a strict commitment to my readers since I'm not charging anything.
But I hope to write almost everyday on the stock market since I know they are ever changing and you might continue to need to help and guidance from a different perspective.
The chart above shows SPX continue to trade sideways.
We already have more than 1 million Covid patients in the world with the US the most badly hit. But the market did not seem to sell off that much despite the increasing number of bad news.
So perhaps the market is more resilient than we think or it has already priced in the health and wealth issues affected by the virus.
Look at the green support area that I have drawn. As long as SPX stays above here then it is likely to trade sideways and eventually breakout higher.
A double bottom has formed in the 60 min chart. So as long as this double bottom holds which is also where the green support area is, then SPX will continue to trade sideways and eventually breakout higher.
On the other hand, if the double bottom fails and the SPX breaks below the green support area, then we could have weakness and more sell off.
Today, watch the highs I have drawn on the chart. There is also a bullish cross nearby. If SPX can break above this area, then it is likely to move higher today.
The chart above shows the daily chart of the SPX.
As you can see, the SPX is trying to break above the downtrend line. It has not been able to do so, but if it can break above this daily downtrend line, then it may signal a change of trend.
A change of trend from a bearish trend to a bullish trend.
We also want to see it trade back above the daily 20 MA.
Watch the lows that I have highlighted in the chart above. As long as SPX stays above this lows, then it will continue to trade sideways and eventually breakout higher.
This is just speculation but a cup with handle pattern may form. We shall see.
Another thing to note is the declining volume in the SPX as it trades sideways. This declining volume may point to the fact that there may be less selling as the market trade sideways.
This is good and perhaps may help the market to breakout higher in the future.
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.
Jul 13, 20 07:44 AM
Here is a technical outlook for the KLCI.
Jun 29, 20 08:04 AM
Technical analysis of the KLCI for the month of June 2020. What is likely to happen? Read here.
Jun 29, 20 08:03 AM
Well, sell in May did not materialize for the S&P 500 but the market continues to chugg higher. What is in store for us this month?