The negative news parade continues in the markets sinking US stocks over the last month. There is lots of Fed speak on tap this week so stocks will remain in a malaise if the hawkish rhetoric continues but if there is even the slight hint of dovishness, stocks could take off vertically. The stock market is operating under pure emotion and news bites currently.
Utilities collapsed last week sending the broad stock market lower. It was the kiss of death. For the best chance to turn things around, bulls need higher utes and commodities and lower volatility. Otherwise, the beatings will continue until moral improves.
The charts are constructive and looking for a rally but each time the move off the bottom begins, thwack, the bears slap it back with negative data or Fed speak (hawkishness showing a willingness to raise rates). The SPX daily chart previously posted is ready to rally. The Friday beating sends the money flow indicator lower but overall, the daily chart is good to go starting any day this week. There may be a jog move at the bottom here on a daily basis, down-up-down, then the rally on the daily chart begins.
The SPX weekly chart is universally positively diverged wanting the bulls to stage a multi-week rally (green lines). Due to the thrust of negativity over the last couple weeks, however, the downside has momentum (small red lines), so a jog move may be needed on the weekly basis before the rally gets its sea legs and starts the move higher (1 week up, 1 week down, then up and away).
Price falls into that blue channel representing months of support and resistance price action in 2020. The 3500 level is key. Goodnight Irene if that fails. Note how price came down to the confluence of the horizontal price support, the bottom standard deviation band and the 200-week MA at 3589. This week is a big test because if price cannot regain 3589 and well above, the Party's Over.
The week in June on the price low was high volume. The last 3 weeks have tested that price area and volume each week is below that week in June hinting that the selling is becoming exhausted. The orange circles show 7 big distribution weeks in the stock market where the smart money was selling to Joe Retail so he could hold the bag. Note how the investment banks were dumping shares like crazy at the end of last year selling the stocks to the stupid public that is now eating franks and beans for dinner.
The falling wedge pattern and oversold stochastics are bullish. Thus, stocks are trying to find their sea legs and a multi-week rally should begin over the next couple weeks unless the Fed members start flapping hawkish wings again and scare the children. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Wednesday Morning, 10/5/22, at 8:47 AM EST: The US stock market stages the biggest 2-day rally in 2-1/2 years. The SPX jumps from 3584 on Friday, 9/30/22, to 3792 yesterday, a gain of 208 big points, +5.8%. The Dow leaps from 28715 on Friday 9/30/22, to 30325 yesterday, a gain of 1610 points, +5.6%.
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