Analysis of the general markets especially the S&P 500 for the month of September 2021.
SPX did not drop below yesterday's low. Seems like it is trying to find support from the congestion on the left. In fact it made a higher low in the 60 min chart. It is possible that it might be making a 60 min ascending triangle as well.
It is also trying to break out above a downtrend line. If it continues to go up, the top of the ascending triangle will be a new area of support. Perhaps the ascending triangle pattern could be a catalyst for a bullish reversal back up.
However, if SPX drops and the pattern fails, there could be more selling ahead. Watch the lower uptrend line in the ascending triangle pattern. If SPX breaks below this line, the more selling will likely happen.
The reason I am not very bullish in the 60 min charts is because there is a bearish cross in the daily chart where the 20 MA is crossing below the 50 MA. In the daily chart, the SPX may be making a daily ascending triangle as well. Maybe not but I am just trying to figure if it is or not.
What we could do is draw an uptrend line to connect the lows. Watch this line just like you watch the 60 min one. If SPX stays above this line in the next few trading days, then all will be alright as the SPX is telling us it does not want to go down.
However, if SPX breaks below this uptrend line, then we could be in for more selling. This is where we could see the SPX travel down to meet the rising 200 MA which is a line in the sand for this bullish uptrend.
One bright spot in the S&P 500 or the general markets is that the consumer discretionary sector or the XLY ETF is doing pretty well compared to the general markets. It rebounded up to make new highs and the recent correction these few days saw it decline less that the S&P 500. It is still staying above its 50 day moving average.
If you look carefully you will realize that it is making higher lows in this long term uptrend line. This perhaps is good news for the market and might help the S&P to move back up.
Utilities or the XLU is now at the 200 MA support area. It is also at price support area, where the XLU had a bottom back in July. This could be a potential area for a bounce back up and we should pay attention to this as there could be stocks in the XLU sector that will offer a buying opportunity if the support holds.
A green bullish candle yesterday in the XLU tells us that support is doing its job and if XLU stays above the lows of the previous 2 days then we could have a reversal back up.
On the other hand, if XLU breaks through this support area, then more selling could happen.
A sell off happened after the SPX broke below an uptrend line yesterday. The chart above shows the 2 hour chart of the S&P 500 and we are again very near the prior lows. The prior low areas offer some support which is why the SPX is bouncing back up a bit. So far we are not out of the woods yet.
If SPX drops below yesterday's low then more selling could happen and this might be quite bearish for the short term.
The tech sector which is the XLK was badly damaged. XLK dropped below a support line area. Furthermore the daily 20 MA is curving downwards and might make a bearish cross in the near term. It just looks like the XLK is rolling over from the highs it made in early September 2021.
If XLK drops below yesterday's low we could have more selling in the general markets. Who knows, we might even retest the rising 200 MA in the XLK.
Taking a look at the XLV which is the healthcare sector we can see that quite a lot of selling has happen. After the XLV dropped below an uptrend line, the sector continues to move down. A bearish cross where the 20 MA crosses below the 50 MA is happening and this could spell more bearishness.
Thankfully there are some consolidation support around. I have highlighted them Support 1 and Support 2. Currently the healthcare sector is at support 1 which might quickly deteriorate. If support does not hold then we could probably see it drop to support 2 which is a better support since the consolidation is larger and longer.
This is probably where the rising 200 MA will also meet price and if that happens, we could see if it can offer traders a buying opportunity in the healthcare sector.
USO, or the United States Oil Fund has gained quite a lot recently. Recently it also had a bullish cross where the 20 day moving average crosses back above the 50 day moving average. Long sustained upwards move usually starts with a bullish cross of the 20 MA above the 50 MA.
For oil followers this is a good technical development. Another good technical development is the fact that the USO has broken up above previous highs. USO broke above the stubborn resistance. If you remember your technical analysis, resistance once overcomed will be a new support area.
Therefore the new support area for the USO will be around the $51 area. This will be an area for you to watch. I believe that as long as USO stays above this area, it will be good for oil stocks on the whole. And oil will also continue to move higher.
Natural gas has been on a nice move up. In just a few months it has moved up from $3.00 to $6.00. An impressive run up of more than 100% in just a few months. Nat Gas has been in an uptrend and when a stock or commodity is in an uptrend it is likely to continue to move up.
The way to spot a commodity that is in an uptrend is just to look at the moving averages. Nat Gas is trading above its rising 20 MA, 50 MA and 200 MA. This spells a very strong uptrend which is why it move up quite a lot in a very short period of time. Right now Nat Gas has moved up too much and is getting a bit parabolic. Not to say that it will go crashing down but when something goes parabolic it is good to remember that the sell off can be just as fast.
What we want to start to see for Nat Gas bulls is for it to start to have some consolidation or sideways trading. This will give Nat Gas a rest before going higher. But since Nat Gas is something that consumers use and when they start complaining of the skyrocketing prices, the government may step in to do something about it and that may be a catalyst for a fall.
The XES or the S&P oil and gas equipment and services ETF has broken out of a reverse head and shoulders pattern. There is also a bullish cross recently and the XES has closed above the 200 day moving average as well. This could be bullish and is good news for oil & gas equipment stocks.
Taking the projected target of the reverse head and shoulders, the XES could move higher and even reach its former highs back in June 2021. If that is true then this is very very good for this sector's stock. Which I think you should have a look at them to see if there are any good bullish chart pattern setups which you can profit from.
Coming back to the S&P 500, the index hit the 50 MA and yesterday it formed a topping tail. A topping tail usually comes before a reversal back down and this could spell some bearishness in the next few days. What is worrying is the SPX might form a bearish cross where the 20 MA cross below the 50 MA.
This bearish cross has not happen for a very long time and thus could add pressure to the index. A sell off is alright as long as the SPX makes a higher low. That means the sell off must stop somewhere higher than then previous low which happened around 4300. If it is able to do so, then we could resume higher into the end of the year.
The chart above shows the S&P 500 futures. Using a simple trend following strategy, which is the 20 day moving average, the 50 day moving average and the 200 day moving average, we can see that the US stock market is indeed in a very very bullish outlook.
Whether it is the 20 MA, the 50 MA and the 200 MA, all three moving averages are rising and the SPX is above them all three. If the SPX is above the rising 50 day moving average, I would advice you to be bullish in the medium term. If the SPX is above the rising 200 day moving average, I would advise you to be bullish on the US stock market for the long term.
Taking a look at Bitcoin, we can see that Bitcoin has already recovered quite a lot since the sell off. The weekly Bottoming tail at the bottom right at support hinted of the lows of the sell off and after that Bitcoin continues to rise to meet the resistance area.
I think there is a lot of resistance overhead but the fact that Bitcoin forms bottoming tails in the weekly chart shows that it wants to fight the resistance and move higher. Watch the first of the Bottoming tail made earlier. If BTC manages to stay above the lows of this bottoming tail, then I think it will overcome the resistance and move higher.
The above shows the daily chart of Bitcoin. As you can see it has indeed started a new uptrend. Making higher highs and higher lows. It is also now above all three moving averages.
I suggest that you watch support 1 and support 2. This is where if the support holds then I think Bitcoin is likely to move higher from there.
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Apr 12, 22 09:34 AM
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