Stock Market Analysis - 3/6/2020

已更新

As a background, I do this type of analysis daily to gauge sentiment in the market. The reason for this analysis is to be on the right side of the market whenever I put on new trades. Have you even tried to run with the wind behind your back? Going long a stock when the general market supports a bullish sentiment is what it means to trade with the wind behind your back. Generally, 80% of stocks follow the general market direction therefore, although that stock you've been watching has a beautiful breakout pattern, if the general market is breaking down, that breakout pattern will probably end up being a fake out.

The markets this week have been a complete roller coaster. If you went long one day, you probably got stopped out the next day and vise versa. This is precisely what happened to me today as markets gapped down 3% today but closed strong and this is what occurs in high volatility market conditions. This type of price action is a day traders dream but a nightmare for swing traders like me. The best thing to do right now, if you are a swing trader, is simply not participate.

註釋

SPY
The daily chart on SPY looks productive for a bullish case. Today's price action started with a big gap down right to the Anchored VWAP from the December 2018 lows (Magenta Line). SPY bounced at this obvious area of support but started to fade down again mid day. Toward the close, all indexes had a strong high volume spike and closed near HOD. Today's price action looks like a typical bottoming pattern and I expect markets to rise back up to the 300 level. If SPY can break above and hold the 300 area, I believe this will be a great bullish case. Otherwise for now, SPY remain neutral.

註釋

QQQ
Price action on QQQ is similar to SPY however, QQQ lagged SPY in terms of performance today. This could be evidence of the continued rotation out of tech and into safer industries such as utilities or consumer staples. Today we broke below the Anchored VWAP from the low of this less off but we are now above right below it. Next week I am looking to see if we can break and hold back above this level. Overall QQQ is neutral.

註釋

IWM
Weakness in IWM continues and it's getting ugly. IWM is officially in bear market territory as price is below a falling 200 DMA. On the Daily Chart, we broke below the important 145 level. IWM has a clear short term and intermediate term downtrend as price held below the falling 5DMA. If we continue to hold below the 145 level, expect more downside. Otherwise, IWM needs to recover and hold above the 145 level next week for a bullish case. Overall, as I have been saying for the past week, I would not want to be long IWM.

註釋

VIX
Today VIX closed bearish as it printed a shooting star candlestick after rejecting 52 week highs. VIX is currently at strong resistance levels February 2018 and August 2015 highs and it would make sense to see some retracement here. VIX also looks like it has topped with a 2B Reversal Pattern on the 30m Timeframe.