The uptrend in Dow is still very very strong. The US market is still making new all time highs. Will the uptrend continue?
We had an incredible first 2 weeks of bull run in the US market. All 3 indexes keep on making record highs. This kind of bull run in January has not been seen for a very long time.
Each day I will look at the major indexes. I also analyze other sectors and indexes around the world. Whenever I see something interesting I will post them in the analysis here.
The latest analysis will be on top. So please refresh your browser for each day's new analysis.
I forgot to put the analysis here and only show in the Telegram group. Anyway I shall upload it now.
We had a really really nice bullish run up in stocks yesterday. The Dow Jones Industrial Average has managed to climb back above 26,000 and that is a good thing to see in the stock market. Normally round numbers of 1000 can be a psychological resistance area.
The chart above is the 5 min chart of QQQ.
When it is below in the red zone, it was not conducive for day trades. Early in the morning when QQQ went back into the white zone, it also broke out of a 5 min ascending triangle. This set up a nice bull run up in the 5 min charts.
At this moment, the charts still tell us that it is conducive for day trades to the long side. Be careful if it drops below into the red zone.
When we look at the 60 min charts of the SPY and DIA, it looks like it may form a double top kind of pattern. After a nice run up, bearish reversal patterns should help to make us cautious.
When I look at the MACD for any divergence, we can see that there is a divergence but not the perfect kind of divergence because a good one would not have the histogram going below 0. The stochastics has also managed to go back to the overbought area instead of hovering around 60 to give us a divergence.
The same story can be seen in the DIA. To gauge whether the double top in the 60 min charts of SPY and DIA will materialize, we need to look at the futures.
The chart above is the 60 min chart of the Dow Jones futures.
The Dow has managed to form a support area which I have drawn with a horizontal line. We can also connect the lows to form an uptrend line. I believe that as long as the Dow futures is able to stay above the support area and above the uptrend line, we will continue to see more record highs in the Dow Jones.
Yesterday I highlighted to you that the semis may be breaking out of a triangle pattern. Right now, the bulls are winning the battle of the triangle because it broke above the upper line. If the breakout continues, we will see new highs in the semi sector and experience an explosive run up in semi stocks.
Previously when the SMH broke out of another triangle, it helped to send semi stocks higher and along with it the entire market.
The charts above is the daily chart of SMH on the left and the 15 min chart of SMH on the right. For those of us who have entered SMH or semi stocks, we are now up quite a lot.
As the SMH hit the daily 50 MA and support area, a 15 min ascending triangle formed in SMH. When SMH broke out of the ascending triangle, it send many semi stocks higher. At this moment, the SMH is at the former highs which might act as a small resistance.
I usually like to take some positions off the table if it drops below the 15 min 20 MA. How you manage the trade will be up to you.
After failing to stay above 26,000, the Dow corrected but swiftly recovered to go back above 25,900. I updated the analysis yesterday, just forgot to post them here. But posted them in my Telegram Group.
As the Dow recovered, it formed some kind of cup with handle pattern. This is good and it tells us that the Dow does not want to go lower at the moment. Perhaps it might trade sideways a bit.
I have drawn a box area over the entire trading area. As long as Dow does not drop below the low of the box, I consider it to be trading sideways taking a rest. After a long run up, it is always good to see Dow Jones trading sideways.
The chart above is the 5 min chart of the QQQ.
As you can see, the red / white zones can be quite helpful to tell us when are good times to long stocks and when are bad times to long stocks for day trading. I just colored the area below the 5 min 50 MA as red zones to help us gauge the mood of the market.
Yesterday, the QQQ gap up but immediately drop below the 5 min 20 MA. It subsequently drop below the 50 MA into the red zone. Then the whole day was heavy selling until the end of the trading day.
Today, looking at the premarket, we can expect a gap up.
If QQQ manages to stay above the red zone and stay above the price congestion area I have drawn, then we might have a nice bull day trade environment today.
Meanwhile, the semiconductor sector is shaping up to have a triangle type of pattern in the daily chart.
I have drawn two lines, the upper lines and the lower lines. Depending on which way it breaks out, it will help or hurt the stock market. If SMH breaks out above the upper lines, then we can expect the stock market to continue its upward trajectory.
I think I pointed out to you sometime ago how AMZN is breaking out of a daily ascending triangle. As soon as the stock broke out of the pattern, it shot higher. When I check the latest net worth of Jeff Bezos on Forbes, it is $108.90 Billion. Wow!
If the rising 50 MA and 200 MA is of any indication, Jeff Bezos' net worth might continue to skyrocket. I won't be surprised if one day his net worth goes up to $120 Billion.
Yesterday we had a stock market holiday because of Martin Luther King Jr's birthday. Despite the holiday, the Dow futures still rose. As of the time of this writing, the Dow is very close to breaking above the 26,000 level.
The 60 min chart of Dow futures still point to a very strong uptrend at this moment. Notice how it has been staying above its rising 20 MA and 50 MA most of the time. We should remain bullish on the index as long as it is above the rising 20 MA and 50 MA.
If the index continues to move up, then Dow might even break 26,000!
Usually round numbers of 1000 can be a psychological area of resistance. Therefore, it is important for the Dow to be able to break above the 26,000 mark decisively. If it hovers around 29,950 to 29,990 then we know that it might not be able to break higher and a correction might come.
On the other hand, Dow should trade above the 26,000 and stay above it. Preferably trading to 26,100. Then its safer for the index to continue to go higher. Sometimes, an index can break above a psychological point and then reverse back very soon.
Let's take a look at other world indexes as well.
The chart above is the 60 min chart of Hang Seng Index. I did an analysis on it recently. Technical Analysis Of Hang Seng Index : Market Outlook. The index broke out of a consolidation recently and then proceed to move higher.
I shall continue to be bullish on Hang Seng as long as it can stay above its rising 60 min 50 MA and 200 MA.
Hang Seng is now hovering near its all time high of 31,958 set back in 2007. Well, it took a decade for Hang Seng to reclaim its glory. If the uptrend continues, it will break its all time high very very soon.
The FTSE 100 has also broken out of a resistance area and continued to shoot higher. Currently it can be said to be quite overbought. The trend is still up and I think if Dow continues to move up, the FTSE 100 will likely follow.
In the event of a correction, the previous high will now act as a powerful support area. If FTSE 100 drops to that area, it will be a great opportunity to buy stocks cheaper.
Oil has also been trending up. Which is why many oil stocks seem to be flying up so much recently. Oil broke out of an ascending triangle and it is now still in a nice uptrend.
For short term traders who wish to spot the short term swings, you would need to look at the 60 min charts for more precise timing.
Anyway, since the daily chart is up, we should continue to stay bullish on oil.
The above chart is the monthly chart of Nikkei.
Nikkei is now entering a new milestone by breaking out of a very very long term resistance. A possible resistance area is nearby but I do believe that if the uptrend continues, the resistance area won't be a problem.
The bullishness and uptrend in different stock markets around the world tells us that this bull market is not only isolated to the US market. The whole world is experiencing a big bull run and that is good.
The daily chart of Nikkei shows how it shot up higher after it broke an ascending triangle.
Since the daily trend for Nikkei is up, we should continue to be bullish on the Japanese stock market. Even if there is a correction, a drop to the support area which is the top of the ascending triangle, will provide an opportunity for traders to buy Japanese stocks cheaper.
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