Bears Must Capitulate Before Market Heads Lower
Have the stock market bears capitulated yet? I'm not referring to permabears, they are their own breed... Markets around the globe are showing resilience despite the global economic disruption due to Covid-19. Perhaps the market is signaling that the economic damage isn't all that bad after all or maybe pricing in the economy opening back up. Regardless, remember, markets are forward looking. Going forward, the true damage to the global economic infrastructure will be unveiled leaving the possibility of a strong sell off ever more likely. Keep in perspective, the market rally off the March lows has taken a little over a month. Previously it took 8 months to make up that same ground. Take that in for a second while we take a look at Apple Inc. (AAPL) and the PowerShares QQQ.
Top Heavy
Yes, AAPL is nearing all-time high territory and there is upside of around 5%. However, take a look at the 4-hour chart below and you'll see some warnings.
Since January 2020, the Chaikin Money Flow (CMF) has been in decline, signaling market weakness. Perhaps smart money leaving? In addition, MACD is not confirming the most recent push to the upside. This does not mean price will drop from these levels. I view this more as a signal that any bullish positions here should be taken with caution, understanding that the upside may be limited. As AAPL approaches resistance between 301-309, watch for how divergence continues to develop. Bias: Bearish.
One Last Gasp?
Below is the 4-hour chart of the QQQ. The take away from the chart is that price action is exhibiting signs of bullish continuation. There is a potential ascending triangle pattern, on top of CMF approaching positive territory as the triangle pattern completes. Additionally, Bollinger bands are compressing, signaling volatility is near.
Not shown here is the Elliott Wave (EW) picture. In my opinion, from an EW view this could be a wave 4 consolidation before the final wave 5. Wave 4 typically develops into triangles.
In conclusion, I believe the market makes one final push. The QQQ may attempt to fill the GAP at 230 before ensuing in a correction. So short term, yes, I am a bull. Bias: Bullish.
Have a great trading session and talk to you all later today!
Top Heavy
Yes, AAPL is nearing all-time high territory and there is upside of around 5%. However, take a look at the 4-hour chart below and you'll see some warnings.
Since January 2020, the Chaikin Money Flow (CMF) has been in decline, signaling market weakness. Perhaps smart money leaving? In addition, MACD is not confirming the most recent push to the upside. This does not mean price will drop from these levels. I view this more as a signal that any bullish positions here should be taken with caution, understanding that the upside may be limited. As AAPL approaches resistance between 301-309, watch for how divergence continues to develop. Bias: Bearish.
One Last Gasp?
Below is the 4-hour chart of the QQQ. The take away from the chart is that price action is exhibiting signs of bullish continuation. There is a potential ascending triangle pattern, on top of CMF approaching positive territory as the triangle pattern completes. Additionally, Bollinger bands are compressing, signaling volatility is near.
Not shown here is the Elliott Wave (EW) picture. In my opinion, from an EW view this could be a wave 4 consolidation before the final wave 5. Wave 4 typically develops into triangles.
In conclusion, I believe the market makes one final push. The QQQ may attempt to fill the GAP at 230 before ensuing in a correction. So short term, yes, I am a bull. Bias: Bullish.
Have a great trading session and talk to you all later today!
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