SP500/Technology - CUP AND HANDLE pattern forming
Here I'm going to talk about the formation of a potential Cup and Handle pattern in the S&P500 and The Tech Sector
Let me know how it goes for and how you view these recent movements
If this analysis helps, I'd really appreciate a like, it lets me know that what I'm doing is good work.
No matter what hits the Tech Sector it continues to grind higher even with the highest Market Value stocks having P/E ratios far exceeding 30. This makes sense, although overvalued in terms of EPS the protection they offer is unrivaled in the market.
However when we reach prior highs some of the same fears that caused the recent correction will creep in, especially with positive vaccine headlines and positive earnings from financials.
Both the SPX and S5INFT have moved above their upper Day and 4 Hour Bollinger bands and the pre-market today suggests they will stay there. Further movement up will cause the 4hr RSI to hit close to and potentially above 80 as financial earnings push the market higher and Apple's new iPhone gives a boost to tech.
Therefore I suggest a handle pullback may be in order to allow investors a buying opportunity. I assume that we may break the previous high of 3587 and move up over 3600 briefly up to Fibonacci R2 at 3624 which will allow tech stocks to recover near to previous highs of:
AAPL:$130
MSFT:$230
NVDA:590
AMZN:$3550
These highs will cause mass profit-taking hitting the market down to potentially below 3587 which could cause further downside towards the 50d MA support point at about 3430. If this support remains intact (which fundamentally it should) this will signal a great buying opportunity for tech moving into the Holiday season pushing it even higher than before. This will be dependant on how Investors view the election results, however with the range of potential outcomes for the market directly being very tight with either Trump or Biden as president the results could be almost irrelevant.
Therefore if you're in tech stay there until you see high volume selling at major resistance then buy more on a confirmed reversal at the bottom. If you're not in tech already it may be risky to get in now, although if you are willing to be actively trading and aware then this could be a great way to make some quick profit and use this to buy more on the dip.
Best of luck and Stay Disciplined
Let me know how it goes for and how you view these recent movements
If this analysis helps, I'd really appreciate a like, it lets me know that what I'm doing is good work.
No matter what hits the Tech Sector it continues to grind higher even with the highest Market Value stocks having P/E ratios far exceeding 30. This makes sense, although overvalued in terms of EPS the protection they offer is unrivaled in the market.
However when we reach prior highs some of the same fears that caused the recent correction will creep in, especially with positive vaccine headlines and positive earnings from financials.
Both the SPX and S5INFT have moved above their upper Day and 4 Hour Bollinger bands and the pre-market today suggests they will stay there. Further movement up will cause the 4hr RSI to hit close to and potentially above 80 as financial earnings push the market higher and Apple's new iPhone gives a boost to tech.
Therefore I suggest a handle pullback may be in order to allow investors a buying opportunity. I assume that we may break the previous high of 3587 and move up over 3600 briefly up to Fibonacci R2 at 3624 which will allow tech stocks to recover near to previous highs of:
AAPL:$130
MSFT:$230
NVDA:590
AMZN:$3550
These highs will cause mass profit-taking hitting the market down to potentially below 3587 which could cause further downside towards the 50d MA support point at about 3430. If this support remains intact (which fundamentally it should) this will signal a great buying opportunity for tech moving into the Holiday season pushing it even higher than before. This will be dependant on how Investors view the election results, however with the range of potential outcomes for the market directly being very tight with either Trump or Biden as president the results could be almost irrelevant.
Therefore if you're in tech stay there until you see high volume selling at major resistance then buy more on a confirmed reversal at the bottom. If you're not in tech already it may be risky to get in now, although if you are willing to be actively trading and aware then this could be a great way to make some quick profit and use this to buy more on the dip.
Best of luck and Stay Disciplined
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