MARKET OVERVIEW 👨👩👧👦 | $SPY + $APPL + $JNJ + $JPM + $T📊📊📊Let's take a look at the S&P, Apple, Johnson and Johnson, and AT&T. Today we are looking to see if we can find the direction of the market going into the week by analyzing some top S&P holdings that are indicative of different key sectors.
The idea is to look at two bullish sector charts Apple (tech) and Johnson and Johnson (healthcare), and two bearish charts JP. Morgan (financials) and AT&T (communications), to see if we can find the direction of the market.
While our money is on more upside eventually (especially with Apple making an All-Time High (ATH), zero interest rates, and stimulus outweighing temporary slow recovery concerns), we want to know if the bears of the market pull us down or the bulls can sustain continued uptrend going into the week.
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S&P 500 Index
Support S&P:
We have found a reaction on the S1 major price pivot point at the S/R flip. This is of course the ideal spot for the bulls to find support. If that last wick was the only test of this level we end up getting, all the better for the bulls.
If we do need to test lower levels, then the S2 untested bullish orderblock right below us provides another chance at retaining a bullish market structure.
If neither of these hold, the bulls have one last chance at the uptrend with the S3 orderblock cluster and previous range lows. A grind down to this level like we see with AT&T seems like one possible pathway there.
Resistance S&P:
The main resistance we will be looking at with most of these charts is seen in the S&P's R1 orderblock cluster at the previous swing high.
Regardless of where we find support, this resistance will be the main point of contention.
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Apple
Support APPL:
Apple is by far the most bullish asset here. It is also the top holding of the S&P. The major support for Apple is the S1 orderblock and S/R flip cluster at the previous All-Time High. For the rest of the market to retain a bullish structure, S1 holding is key.
If S1 can't hold, the S2 orderblock and gap-fill is the next best hope for the bulls. The bulls don't want to see any weakness for Apple, so holding these levels and making new highs is key.
Resistance APPL:
Apple resembles the S&P, and that is logical because it is the biggest S&P holding. Rejection at R1 for Apple means no new ATH. Breaking R1 means a new ATH. How Apple reacts matters for the market. We see this one being broken eventually, but it has to happen sooner rather than later to lift the rest of the market up and avoid a "slow recovery."
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Johnson & Johnson
Support JNJ:
The S1 orderblock and gap-fill on JNJ is about to be tested and is the ideal support. Finding support here means another point for the S&P bulls because we get JNJ working for us and not against us.
If S1 can't hold, we have S2 not too far away, this plays into the S&P's S2 holding as well. A dip this low isn't ideal, but the bullish market structure isn't broken if S2 holds.
Resistance JNJ:
JNJ has been correcting longer than most of the stocks on this chart. Of course, it also has a more bullish overall structure than our JPM and T bearish charts. For JNJ though, the longer correction means more levels of resistance, both the R1 S/R and orderblock and R2 S/R stand in the way for JNJ. This makes it a little harder to rely on than Apple from a pure TA perspective.
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J.P. Morgan
Support JPM:
Big banks have their pros and cons right now, but for the market to reflect those pros S1 holding is ideal. JPM could be off to the races, or it could be making a drawn-out bottom formation.
A retest of S2 gives weight to that long drawn out bottom, therefore the big bank and S&P bulls want S1 to hold so we can maintain momentum.
Resistance JPM:
The primary resistance for J.P. Morgan is the R1 orderblock at the prior swing high. The recent market structure is similar to Apple and the S&P as a whole, it is only the previous structure that signals that JPM is a weaker asset currently. Some good JPM fundamentals could help the S&P here.
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AT&T
Support T:
AT&T is the most bearish S&P holding we are charting. It lost its major support and is onto the S2 S/R and orderblock cluster. If this one doesn't hold, giving us a higher low, then we are simply retesting the COVID lows. If major holdings start breaking down to new lows, its a bad look for the market. The best way to avoid making new lows is not to retest old lows and instead to make lower highs. This is what the bulls want from T.
Resistance T:
Even though this is the most bearish chart, there isn't a ton of noteworthy resistance, which is a good thing. R1 is the main resistance for T. This range is notable as it was a previous resistance as well, T has this in common with the S&P... which helps confirm R1 being an important level to breach for the bulls.
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Summary:
The S&P rallying from here or consolidating above S1 would be ideal for the bulls. For this, we need the more bullish S&P holdings like APPL and JNJ to hold their respective support levels and then rally while weaker holdings like JPM and AT&T avoid too much further correction.
If some of the weaker holdings can find support at their current ranges, or perhaps even at the next range down while the more bullish holdings stay their ground, then we could still be looking for S1 and S2 to hold for the S&P.
However, if the market tries to go bear, then we would more be looking big tech like Apple to hold up the rest of the market like Atlas while we eye S3 for support for the S&P.
It seems unlikely that we make new lows, and so we are looking for support to hold overall, but a trip down to S3 certainly will have an overall market recovery mimicking the slower recovery noted by the FED and this scenario likely results in retests of the bottom for some of the weaker S&P holdings.
Will the S&P pull an Apple and aim for new All-Time Highs, will it correct for a bit like JNJ perhaps taking us to S3, or are we going to get a JPM and T style upset? That is the question.
Resources:
www.zacks.com + www.nytimes.com
