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Gold Makes New All-Time HighGold price made a new all-time high overnight of $1,945/oz breaking the old record of $1,920/oz set back in 2011. Price is currently holding above $1,930/oz and close to making July a record closing month as well if gold holds above $1,825/oz into August which looks likely. Price has been on a steady rise with bullish momentum since mid-2019 as indicated by the green and yellow candles after price broke above the red $1,400/oz resistance level. Price is currently breaking to new all-time highs on a yellow candle which indicates that there is bullish momentum volatility behind price, or extreme optimism by traders. The Relative Strength Index(RSI) shows the green RSI line rising and trending above the purple signal line which indicates bullish short-term price momentum, with both lines rising and trending above the 50 level which is the midpoint of the total RSI range. An RSI reading above 50 indicates bullish intermediate-term price momentum while a reading below 50 indicates bearish intermediate-term momentum. The RSI currently shows bullish short and intermediate-term momentum for gold price. The Price Percent Oscillator(PPO) shows the green PPO line rising and trending above the purple signal line which indicates bullish short-term price momentum, with both lines rising and trending above the 0 level. A PPO reading above 0 indicates bullish intermediate-term price momentum while a reading below 0 indicates bearish intermediate-term momentum. The PPO currently shows bullish short and intermediate-term momentum for gold price. The Average Directional Index(ADX) show the green directional trend line trending above the purple directional line which indicates that the short-term trend direction for price is bullish. The histogram behind the green and purple directional lines is green and rising which indicates that the strength behind the bullish price trend is increasing. The ADX currently shows a bullish trend behind price. The view this year has been bullish on gold with the expectation that price would make a new all-time high by year end, and now that price has officially set a new all-time high the view remains bullish going forward. Current gold and silver stock/ETF holdings are: GPL, HL, EXK, AG, KGC, MUX, CDE, NGD, GDXJ, GDX.
FX_IDC:XAUUSDLong
by PrepForProfit
DOW Wedge Break and 50% Fib CrossThe Dow Jones Industrial Average(DJI) closed Friday at $23,723.7 with a loss of $622(-2.55%) to start off the new month of May. With Friday’s decline price also closed below the lower line of the rising wedge pattern after finding support at, and trending just above it, for the previous 8 trading sessions. This is the second wedge break since highlighting the pattern, but after the previous wedge break failed to materialize in a new downtrend and instead saw a move to new local highs, the lower line of the wedge pattern was redrawn to its current position. Now that we have a break of the lower wedge line again a new lower price target can be found by making a measured move from Friday’s opening price below the wedge line. This target is calculated by taking the difference between points A and B at the base of the wedge pattern and subtracting that difference from the opening price of the first candle to trade below the rising wedge pattern, which is Fridays candle since it opened and closed below the lower line of the wedge. By taking the low of candle A($18,213.7) and subtracting it from the high of candle B($22,595.1) we get $4,381.1. This value is then subtracted from the opening price of Fridays candle which was $24,120.8. $24,120.8 - $4,381.4 = $19,739.4. With the push to new local highs last week above the 50% Fibonacci level, as well as the candles switching from gray to green indicating bullish price momentum, a long trade was entered as the short-term trend shifted to bullish with a stop-loss level for the trade being placed at the last low to be made prior to price pushing higher which is shown in blue and rests at $22,941.9. As long as price is trading above the stop-loss level the long trade can be held. While price has broken below the wedge pattern and a new lower target has been calculated, we need to see a breach below the stop-loss level before placing conviction in the lower target being reached and switching back to a bearish view. The Relative Strength Index(RSI) shows the green RSI line rolling over and back down to the 50 level after hitting a high just above the 60 level last week. In general, an RSI reading above 50 indicates short-term bullish price momentum while a reading below 50 indicates short-term bearish price momentum. The purple RSI signal line continues to rise which indicates bullish momentum in the intermediate-term. The Price Percent Oscillator(PPO) shows the green PPO line rolling over after recently crossing above the 0 level, and the purple signal line has flattened out after recently crossing above 0 as well which both indicate a loss in upward price momentum. A PPO reading above 0 indicates bullish price momentum while a PPO reading below 0 indicates bearish price momentum. The green PPO line trending above the purple signal line indicate short-term bullish momentum while the green line trending below the purple line indicates short-term bearish momentum. The Average Directional Index(ADX) shows the green +DI line rolling over and close to crossing below the purple -DI line. When the green line is above the purple line it indicates that price is moving up and has a positive trend, while the green line trending below the purple line would indicate that price is in a negative trend. The histogram in the background shows trend strength i.e. when the green line is above the purple line and the histogram is rising it indicates a bullish trend that is increasing in strength. When the purple line is above the green line and the histogram is rising it indicates a bearish trend that is increasing in strength. What we’ve seen during the recent period of the green line trending above the purple line(bullish trend) is a declining histogram which indicates a weakening trend, or in this case a bullish trend without strength behind the move. For now the trend in price remains bullish since we have a series of higher highs and higher lows being made, with the blue stop-loss level being the line in the sand which would shift the trend to bearish should that level be taken out. Bearish indications I am now watching are the break of the rising wedge pattern and the move back below the 50% Fibonacci level. The indicators below the chart are showing that the recent move higher is losing steam, but haven’t flipped bearish yet. This upcoming week should give us a better idea as to where price is heading going forward.
TVC:DJILong
by PrepForProfit
Gold Daily Bullish Above 23.6% Fibonacci LevelGold(GC1!) closed at $1,735 on Friday for a -$9.80(-0.56%) loss on the trading day, but rose +$42.6(+2.52%) on the week from an opening price of $1,693 on Monday. Price is trading above the 23.6% Fibonacci retracement level which is the upper end of the total Fibonacci range from the $1,450 low(0% Fib) to the $1,788 high(100% Fib) and is the most bullish level for price to be above and indicates that price is in an uptrend. The current stop-loss level for long trades is just above the 38.2% Fibonacci level shown in blue which is where the last selloff attempt was stopped before price rose to its current level. In order for the short-term uptrend to remain intact, price needs to take out the local high at $1,788. For now, as long as price remains above the 38.2% Fibonacci level long trades can be held with the expectation that price will continue to rise. The Relative Strength Index(RSI) is trading above the 50 level and indicates bullish short-term momentum behind price. An RSI reading above 50 indicates bullish short-term momentum while a reading below 50 indicates bearish short-term momentum. The purple RSI signal line is also above the 50 level which indicates bullish intermediate-term momentum behind price, but is trending flat which means intermediate momentum has lost strength. The green RSI line trending above the purple signal line is also bullish and indicates that there is overall bullish momentum. The Price Percent Oscillator(PPO) shows both the green PPO line and purple signal line above the 0 level which indicates intermediate-term bullish momentum behind price. A reading above 0 indicates bullish momentum while a reading below 0 indicates bearish momentum. While both lines are above the 0 level, they are overlapping which indicates that short-term momentum has stalled out. A short-term bullish reading is when the green PPO line is trending above the purple signal line and both lines are trending up. With the lines overlapping it indicates that short-term momentum is at risk of crossing bearish, but hasn’t occurred yet. The overall short-term view on the daily chart is bullish as the recent candles are green which indicates bullish price momentum behind price, as well as a reading above the 23.6% Fibonacci level indicating that the short-term trend is also bullish. I’d like to see momentum pick up in the indicators below as both the RSI and PPO are indicating a loss of upward momentum in the short-term. For now the 38.2% Fib level needs to hold as support to keep the trend bias bullish, while a move above the local high at $1,788 would likely be a signal of uptrend continuation.
COMEX:GC1!Long
by PrepForProfit
Dow Jones Testing 50% Fibonacci Level After Wedge BreakThe Dow Jones Industrial Average(DJI) ended flat, gaining $39.4(+0.17%) in today’s trading session with a close at $23,515. Price has created two small doji candles over the past two days with today’s doji candle topping out right at the 50% Fibonacci retracement level before price fell back down and closed near the days opening price. A doji is a candle with a small body and small upper/lower wicks and represents trader indecision, with price closing at, or near, where it opened which indicates that neither bulls nor bears were able to move price in either direction with conviction. Price is finding resistance at the 50% Fibonacci retracement level which has acted as price resistance for the past week and a half. The 50% Fibonacci level represents the halfway point between the all time high(100%) and the coronavirus selloff low(0%) and defines whether price is in a bullish or bearish trend. Price trading below the 50% level indicates a bearish bias for price, while trending above the 50% level indicates a bullish bias. The past three daily candles are all gray which indicates no momentum behind price according to my candle color momentum algorithm, so price is indicating that there is no strength right now as the 50% Fibonacci level is being tested. The Relative Strength Index(RSI) shows the green RSI line trending just above the 50 level which is the midpoint of the total RSI range. An RSI reading above 50 indicates short-term bullish price momentum while a reading below 50 indicates short-term bearish price momentum. The purple RSI signal line has leveled out after recently moving higher which indicates that intermediate-term momentum is losing strength. The Price Percent Oscillator(PPO) shows the green PPO line has leveled off after recently crossing back above the 0 level. A PPO reading above 0 indicates bullish price momentum while a PPO reading below 0 indicates bearish price momentum. The purple signal line hasn’t moved above the 0 level which means that the short-term momentum behind price has yet to turn completely bullish. The green PPO line rising above the purple signal line indicates that there is short-term bullish momentum, but in generally you want to see both of these lines rising together as a sign of strength behind price, right now both are leveling out. The current view on price remains neutral with a bearish bias due to the recent breakdown of the rising wedge pattern, combined with the gray/neutral price candles and the failing of price to move above the 50% Fibonacci retracement level. The expected move going forward is a move lower down to the target area shown in red. This target area is a measured move based on the base of the rising wedge pattern shown by points A and B. After price broke below the rising wedge, the difference in price between points A and B was subtracted from the opening price of the first candle to break below the wedge which gives us a lower target down near $19,000, or about -18% below current price. Once price broke below the rising wedge, and the red dashed line(previous stop-loss level for long trades) a short trade was entered with the new stop-loss level shown in blue dashes. As long as price is trading below the blue dashed line at the local highs the short-trade can be held. Should price break above the 50% Fibonacci level and take out the recent highs the short trade will be closed and a new long trade could be entered.
TVC:DJI
by PrepForProfit
6
Dow Testing Wedge Support & Closes Back Below 50% Fib LevelThe Dow Jones Industrial Average(DJI) lost $592.1(-2.4%) for a close at $23,560 as the oil market took center stage and commanded most of the business news cycle today. The Dow is now testing the lower line of the rising wedge pattern and has now moved back below the 50% Fibonacci retracement level as well after managing to close above it on Friday. This move indicates that the 50% Fibonacci level is likely still resistance rather than support seeing as how price was unable to hold above this level for more than one trading session. I normally look for at least three closes above a previous resistance level before considering it to have turned into a support level. The anticipated move here remains to be a breakdown below the rising wedge and am of the opinion that the recent rally off of the coronavirus selloff low is a bear market rally. The current stop-loss level for long trades remains in place near $23,000. Should price fall below that level a new downtrend will likely form; the first level to watch for potential support on a new downtrend is the 38.2% Fibonacci level at $22,551, but odds are if price reverses here the 38.2% level will be violated to the downside as well. The tentative price target on a reversal right now is in the $19,000 range, or roughly -$4,600(-20%) from today’s closing price of $23,560. The Relative Strength Index(RSI) shows the green RSI line holding above the 50 level which indicates short-term bullish momentum behind price. An RSI reading above 50 indicates bullish price momentum while a reading below 50 indicates bearish price momentum. The purple RSI signal line has also turned up which indicates that intermediate price momentum is gaining strength, this line also needs to move above the 50 level in order for the intermediate price momentum to be considered bullish. The Price Percent Oscillator(PPO) shows the green PPO line rising above the purple signal line which indicates short-term bullish momentum for price. The green PPO line is also beginning to cross above the 0 level which indicates that the intermediate momentum behind price is also beginning to turn bullish. A true bullish PPO reading is when both the green PPO line and purple signal line are above the 0 level. The overall view on the Dow Jones remains neutral here, but a breach below the rising wedge pattern, and stop-loss level, will shift the view back to bearish.
TVC:DJI
by PrepForProfit
1
Dow Jones 50% Fibonacci ResistanceThe Dow Jones opened at $23,698 and closed at $23,390 today for a -$328(1.4%) loss after a long holiday weekend, and after a new $2.3 trillion round of corporate bond bailouts announced by the Federal Reserve this past Thursday. Price failed to move above the critical 50% Fibonacci retracement level which is where price also found resistance on Thursday. The 50% Fib level is the midpoint of the total Fibonacci range from the all-time high made in February and the coronavirus selloff low made in March. Price failing to move above this 50% Fib level indicates that the current rally off of the March low should still be viewed as a bear market rally and that the low made in March is at risk of being tested again and/or breached to the downside. With todays decline, price has formed a pattern similar to a bearish evening star reversal pattern at the 50% Fib level. This is a 3-candle pattern that consists of an initial move up(1), a small doji candle(2) and then a reversal to the downside(3). The pattern shown doesn’t quite meet the requirement to be a true evening star reversal pattern as today’s decline(3) didn’t close lower than the midpoint of the first candle of the pattern, but it is close and demands attention. For confirmation of a reversal, tomorrow’s price needs to move lower than today’s close and preferably lower than the midpoint of candle 1. Should we see a move lower tomorrow, the 38.2% Fib level is the first level of support to watch for on a reversal. A move back below the 38.2% Fib level would put price back in the lower bearish range of the Fib retracements(purple-shaded area) and shift the current view on price from neutral to bearish. From there, the next level of support to watch is the 23.6% Fib which is also where the current stop-loss level is. Should price violate that level, all long trades should be exited with the expectation that price is going to make new lows, meaning that short-trades can be entered. The Relative Strength Index(RSI) shows the green RSI line still above the 50 level which indicates bullish momentum, but is seeing a small pullback as price momentum has stalled at the 50% Fib level in the price chart. A move back below the 50 level would indicate that price is building bearish momentum. The Price Percent Oscillator(PPO) continues to show the green PPO line rising above its purple signal line which indicates short-term bullish momentum, but both lines remain below the 0 level which indicates that overall momentum behind price is still bearish. The overall view on price remains neutral here. A bullish view would require a price move above the 50% Fib level while a price move back below the 38.2% would shift my outlook back to bearish which is the move I’m expecting going forward.
TVC:DJI
by PrepForProfit
1
Dow Jones Higher Low, Higher High w/ 38.2% Fib BeatDow Jones Futures are currently up nearly $900(4%) to $23,400 and has made a push above the 38.2% Fibonacci retracement level and out of the bearish lower levels of the total Fib range. With price moving above the 38.2% Fib level, price has also created a higher high and higher low which indicates a short-term uptrend so the view has now shifted from bearish to neutral with a bullish bias. Short-term resistance is expected to come in at the 50% Fibonacci level near $28,300, while a push above that level would put price back in the bullish half of the total Fib range. A bullish pullback from here would be any hold above the 38.2% Fib level with secondary support being at the 23.6% Fib. Going forward, price will remain in an uptrend as long as the 23.6% level isn’t violated. With price making a higher high and higher low, the stop-loss level for long trades can now be moved from the previous doji candle last week to just below the higher low area. This higher low was at the 23.6% Fib level which acted as support for the past 8 sessions and represents an area of price demand prior to new highs being made overnight. The Relative Strength Index(RSI) has now begun to move above the centerline at the 50 level. In general, an RSI reading above 50 indicates bullish momentum while an RSI reading below 50 indicates bearish momentum. A sign of bullish momentum continuation going forward would be a move above the 60 level. The Price Percent Oscillator(PPO) continues to show the green PPO line rising above its purple signal line which indicates short-term bullish momentum. Going forward, the PPO needs to rise above the centerline at the 0 level in order for the intermediate to long-term momentum to shift bullish. Overall, price is looking better here than it has at any other time over the past 5 weeks. A move above the 50% Fib level is critical here for bulls to maintain bullish momentum, with a move above the 61.8% Fib level needed to put price back into a true bullish trend. I was previously expecting a move below the 23.6% Fib level, but with changing technicals comes a change in view, and right now traders appear to be bullish according to the technicals.
CBOT_MINI:YM1!
by PrepForProfit
Dow Jones Rangebound Between 23.6% - 38.2% FibsThe Dow Jones Industrial Average(DJIA) opened at $21,285 on Friday and closed at $21,052 for a loss of -$360(-1.7%). Price closed just above the 23.6% Fibonacci level which has acted as support for the past three trading sessions while being rangebound between the 23.6% and 38.2% Fib levels for the past eight trading sessions. Traders have been unable to push price above the 38.2% Fib level which is keeping price in the lower end of the overall Fib range(purple shaded area). As long as price is trading below the 38.2% Fib level the short-term trend will remain bearish. Price hit resistance at the red downtrend resistance line on Tuesday and reversed which indicates that this trendline is still being viewed as a strong resistance level by traders. Until price rises above the downtrend line the short-term trend will remain bearish. Price is down -29% from the all-time high of $29,568 made on February 12th and up +15% from the $18,213 bear market/selloff low made on the 23rd or March. The Relative Strength Index(RSI) shows the green RSI line trending sideways below the 50 level which is the midpoint of the total RSI range. An RSI reading below the 50 level is an indication of bearish price momentum while a reading above the 50 level is an indication of bullish momentum. As long as the RSI line is below the 50 level the short-term price trend will remain bearish. The Price Percent Oscillator(PPO) shows the green PPO line rising above its purple signal line which indicates a short-term bullish momentum trend, but both lines remain below the 0 level which is the centerline of the PPO indicator, A PPO reading below the 0 level indicates overall bearish momentum while a PPO reading above the 0 level indicates bullish momentum. As long as the PPO and signal line are trending below the 0 level the short-term price trend will remain bearish. Current view on price remains bearish with the expectation that price will break down below the 23.6% Fibonacci level and re-test the $18,213 low made on the 23rd of March.
TVC:DJIShort
by PrepForProfit
2
Dow Jones Rangebound Fibs 23.6%-38.2%Still no major change in the market outlook with the Dow Jones Industrial Average(DJIA) being rangebound between the 38.2% and 23.6% Fibonacci levels for the past 6 days, and looks to test lower support at the 23.6% Fib today. The expected move here is still a push below the 23.6% as the coronavirus continues to weigh heavily on the economy, especially with the Trump administration no longer talking about a re-opening of the economy by Easter and have pushed the date back to May. This still seems like an unrealistic goal and odds are the date will be pushed back even further once we near the end of April. The Relative Strength Index(RSI) has begun to roll over after failing to move above its centerline at the 50 level, which is the midpoint of the total RSI range. Above 50 indicates a bullish trend for price while an RSI reading below 50 indicates a bearish trend. The Price Percent Oscillator(PPO) is still rising, but remains below the 0 level which indicates that price still has bearish momentum overall. I expect to see the green PPO line cross back below its purple signal line going forward indicating a return to short-term bearish momentum. Short-term view of the Dow Jones has shifted from a few days of being neutral back to bearish with the opinion that we have yet to see the end of the selloff or the worst of it yet. Major economic data to be released this week are PMI(purchasing managers index) and another expected unemployment claims number in the millions, possibly higher than last week’s all-time record which showed 3.2 million workers filing for unemployment.
CBOT_MINI:YM1!Short
by PrepForProfit
Dow Jones 38.2% Fib ResistanceThe Dow Jones Industrial Average(DJIA) saw a $915(-4%) loss on Friday after failing to move above the 38.2% Fibonacci retracement level which was pointed out in the previous daily chart shared. Price remaining below the 38.2% Fib level indicates that a bearish trend is still in play and that further short-term price weakness can be expected as long as price is below this level. The anticipated move this week is a decline below the 23.6% Fibonacci level and a filling of the price gap that was created from Monday’s close into Tuesday’s open. The Relative Strength Index(RSI) shows price momentum leveling out just under the centerline(50 level) which is the centerline of the total RSI range. An RSI reading below 50 indicates overall bearish momentum for price, while a reading above 50 indicates bullish momentum for price. The Price Percent Oscillator(PPO) has created a bullish crossover with the green PPO line rising above it’s purple signal line. This cross indicates a short-term shift to bullish price momentum, but the overall momentum behind price remains bearish as long as the PPO line is below 0. The market decline on Friday came as the coronavirus economic relief bill was passed which is the largest fiscal stimulus in U.S. history at $2.2 trillion dollars. Traders selling the passing of this bill seems to indicate that “buy the rumor, sell the news” is their train of thought right now and also marks the end of short-term bullish news to incentivize traders to buy. With this bill now being passed, the bulk of the news cycle will mostly be bearish with rising case counts and negative economic data being released going forward which is more than likely going to shake traders’ confidence in the market as well as their faith in the ability of the Federal Reserve and Trump administration to provide adequate economic relief via bailouts and fiscal stimulus to ease traders fears of a looming recession/depression. Major economic data set to be released this week are PMI(manufacturing trends) and jobless claims which is expected to show another extremely high number of people filing for unemployment on top of last week’s record 3.2 million initial claims. Last week’s initial claims number was the highest on record, a number that is expected to be just as high, if not higher, on the next jobless claims release this week as not all those who attempted to file for unemployment in the previous week were successful due to high traffic on claims sites causing sites to go down nationwide. With an estimated three weeks until stimulus checks are direct-deposited, this lag between the passing of the bill and cash actually being placed into the hands of those who need it is indicating that we will begin to see missed rent/mortgage payments as well as other credit and loan obligations which will put further strain on an already fragile credit market.
TVC:DJI
by PrepForProfit
Dow Jones 38.2% Fibonacci TestThe Dow Jones Industrial average saw a $1,351 gain today, up +6.38% from an opening price of $21,468 with a close of $22,552. Price has also now risen +24% off the recent $18,213 low indicating that a short-term bull trend is now in play. After yesterday’s doji candle(trader indecision candle), price today jumped from the 23.6% Fibonacci level up to, and found resistance at, the 38.2% Fibonacci level which indicates that after a day of indecision traders have now shifted to bullish price sentiment, at least in the short-term. This strong move came as the Senate unanimously passed the coronavirus economic relief package in a 96-0 vote which gave traders confidence that the bill will be passed by the House, thus preventing a severe economic fallout from the coronavirus as Americans and companies affected by the coronavirus will now have the financial support that they need to support them until this pandemic is over. This fiscal stimulus appears to be more important to traders than the massive Federal Reserve intervention over the past three weeks which has seen a return to a 0% Federal Funds Rate, trillions in credit line extensions to banks as well as a relaunching of Quantitative Easing which this time around equates to an unlimited amount of mortgage-backed securities and Treasury bonds now being purchased by the Fed. As for the Dow, I’d like to see price rise and close above the 38.2% Fib before becoming too optimistic that a low has been made. As long as price is trading below the 38.2% Fib the trend is still technically bearish. If price does manage a close above the 38.2%, the next important level to beat is the 50% level which is the halfway point between the all-time high and the recent low, a move above that level would represent price having regained half of the losses seen during this record-breaking selloff over the past 5 weeks. From there, a rise above the 61.8% Fib level would be needed to put price back into a bullish trend from a technical standpoint. The RSI indicator shows increasing momentum with a rising RSI line, but a move above the center line at the 50 level is needed for upward momentum to hold. Until then, price is at risk of rolling back over and maintaining it’s bearish momentum. The PPO indicator is showing a bullish crossover with the green PPO line rising above it’s signal line which indicates a building of positive momentum, but both lines are still below the centerline at the 0 level which indicates that the overall momentum behind price remains bearish. For those going long this market right now, a stop-loss is recommended if trading/buying. My recommended stop-loss level is shown in red and is placed just below yesterday’s doji candle where traders were indecisive. This stop-loss level is also just below the 23.6% Fib level. A breach below those two levels would likely indicate that bears are still in control of this market and that the recent optimism this week is being overshadowed by deteriorating fundamentals in the economy. While the short-term trend this week appears to indicate that the majority of traders have flipped bullish, I’m still hesitant to take a bullish view myself, at least in the intermediate-term. This is due to the record-breaking unemployment claims seen last week which were released today by the Bureau of Labor Statistics and showed that a massive 3.28 million people applied for unemployment last week alone. Traders appear to have shrugged off this all-time weekly record which smashed the old weekly record by 400%. While their financial needs may be temporarily eased via fiscal stimulus, the number of people filing for unemployment this week is likely to be another number in the millions when those numbers are released next week. These are millions of people unemployed who will likely not be taking their stimulus checks or using their unemployment money to help stimulate the economy. If they are lucky, the combination of the two will be just enough to cover their living expenses and debt payments which many Americans were already falling behind on prior to the coronavirus disrupting economic activity, closing businesses and putting them out of work. The $2 trillion stimulus package amount is based off on the assumption that their time unemployed is temporary and that they’ll be returning to work within 4 months. With millions of Americans now out of work, the odds of an increase in delinquencies will be rising, as well as added pressure on them to make their rent/mortgage payments. With millions of Americans living paycheck-to-paycheck, many will likely not have the funds needed to make their next rent/mortgage payments as unemployment benefits take an average of two weeks to kick in, as well as the fact that the $1,200 stimulus checks will not be sent out until April 6th at the earliest. The companies that have been forced to shut their doors and lay off staff are also at risk of defaulting on debt as many retailers such as Subway and Cheesecake Factory have already notified their landlords nationwide that they will not be paying April’s rent. This is likely the beginning of the coronavirus impact on residential and commercial real estate which looks like it will be the next shoe to drop in the economic fallout of the coronavirus. If we learned anything about the 2008 global financial crisis it’s that investors don’t like it when people stop paying their rent/mortgages. While the intermediate-term view looks dicey, the short-term view by traders is that the Federal Reserve and Trump administration will be doing whatever it takes to prevent another 2008-type of event by going hard and heavy with injecting trillions of dollars into the economy. This may be putting minds at ease in the short-term, but it doesn’t change the fact that we are still seeing a rise in coronavirus case counts with the U.S. just today topping the global list with over 80,000 confirmed cases now in the U.S. We have now topped China and we have not even reached the peak yet in the U.S. outbreak. While the Federal Reserve and Trump administration are doing all that they can to keep traders from selling, there may come a point in the coming weeks where no amount of stimulus or bailouts will instill confidence in traders to buy. The main pieces of the puzzle that I’m personally waiting for before becoming too optimistic on this market, recovery, and monetary intervention are for case counts to stop rising, states/countries to begin reopening their borders and for companies to re-open their doors as well as report revenue and earnings so that we can get a true view of just how large of an impact this virus is having on them. Short-term view is now neutral from bearish assuming that the House will pass the coronavirus economic relief package, with the expectation that the recent lows will be tested again in the intermediate-term once more negative economic data is released going forward.
TVC:DJI
by PrepForProfit
2
Dow Jones 50% Fibonacci Retracement TestDow Jones futures are currently locked limit-down as trading was halted after a -954 point drop at the open of trading. Price fell -5% to a new selloff low of $18,086. Price as now fallen nearly -40% from the all-time high in what continues to be the fastest and steepest stock market decline on record. Price is now testing the 50% Fibonacci retracement level after falling below the lower line of the broadening wedge pattern which failed to act as support and is a bearish technical breakdown. The 50% Fib level represents the halfway point between the 2009 global financial crisis low of $6,460 and the recent all-time high of $29,543 made in February of this year. Should price fail to hold above the 50% Fib level, which looks likely given that we have yet to see the worst of the coronavirus pandemics economic impact, it would indicate that the bear market has lower to go as well as half of the gains since the global financial crisis now being erased. We’ve lost in 5 weeks what took 11 years to gain. The next level to watch for potential support should the 50% Fib level fail is the 61.8% Fib which currently rests at the same level as the 2015 lows and is another -15% lower from current price. That level also represents a -50% pullback from the all-time high(not to be confused with the 50% Fib level) and statistically, based on the -50% decline in 2000 and -57% in 2008, would be a good level to begin averaging in to stocks. The 2008 peak is indicated by the red, horizontal line and rests just below the 61.8% Fib level and should add additional price support from a technical perspective. Hard to believe that we are looking at 2008 price levels after the 11-year bull market that was the longest and greatest in history, but the bigger they are the harder they fall I suppose. While traditionally technical levels of support are good areas to do some dip-buying for short-term trades or averaging down in long-term investments, we may see those levels taken out as every support level on the way down so far has been blown through. Have to admit that I’ve never seen anything like this before with absolutely no significant bounces at what should be support levels, nor has any other trader. The Relative Strength Indix(RSI) is below the 20 level which indicates that price momentum is in oversold territory, and is at its lowest level since the 2008 financial crisis. While the RSI is technicaly in oversold conditions, it can go lower and remain oversold going forward and is not an indication to start buying. It is merely an indication to pay attention and lookout for signs of a reversal ahead. The Price Percent Oscillator(PPO) is in a steep decline indicating extreme downward price momentum and is also at its lowest level since 2009 as prices were making their lows before reversing. This also is not a signal to begin buying as the PPO can still head lower. While the momentum indicators are showing extreme oversold conditions, I have little faith in them indicating a price reversal any time soon as the coronavirus pandemic in the U.S. is just getting started from a health perspective. I’m still anticipating a federal government order for all states to enter lockdowns which will increase the number of business closures as well as the number of people going unemployed thus not having disposable income to help stimulate economic activity. There are now 8 states under complete lockdown representing 1 out of 3 Americans, or 30% of the total U.S. population(101 million citizens in lockdown out of a total U.S. population of 327 million). My guess is that the national lockdown will come after the coronavirus economic relief bill is passed, which is expected to occur tomorrow. A complete lockdown of the country will only add to the number of businesses closing as well as the number of people filing for unemployment, which is estimated to hit over 2,000,000 in this week’s jobs number report. The U.S. has a long fight ahead in not only battling the current coronavirus pandemic, but also fixing the damage already done to the economy, let alone what is still in store. Many businesses will be forced to shutter and may not survive a few weeks, or months. of no sales. Even the ones that do survive, there is no way to calculate at this point in time what the impact will be to their revenue and earnings going forward which is what is needed in order for investors to determine share value. Today, Federal Reserve official James Bullard said that the unemployment rate my jump to 30% and GDP may fall -50% in the second quarter which are scary numbers coming from a Fed official. Those numbers are more bearish than even what major US banks such as JP Morgan and Goldman Sachs are predicting which in themselves are extremely bearish numbers. The selloff we are seeing now could be just the beginning of a much larger contraction going forward and indicate that it’s not a recession that we are facing, but a depression.
CBOT_MINI:YM1!Short
by PrepForProfit
4
Bitcon 38.2% Fib ResistanceAfter rising +60% off of the $3,850 low, Bitcoin is finding resistance at the 38.2% Fibonacci retracement level near $6,400. Price trading below the 38.2% fib level indicates an overall bearish trend for price and the potential for more weakness. Until price moves above the 50% fib level price will have negative bias. A move above the 61.8% fib level is needed for positive trend confirmation. The previous two daily price candles were long-legged doji candles which are candles with small bodies and long wicks and indicate trader indecision. The wicks represent the daily highs and lows made on each day, and the small body indicates that traders closed the daily price near where it opened showing hesitation by both bulls and bears to move price in either direction with conviction. Price is also trading below the Trend Wave which indicates a negative trend for price. In order to regain a positive trend, price needs to move back above the trend wave. The Price Percent Oscillator(PPO) is attempting a positive crossover which is when the green PPO line crosses above it’s purple signal line. The PPO trending below the signal line indicates negative price momentum. The PPO is also well below the 0 level which indicates overall negative price momentum. The PPO below 0 is bearish, while a PPO reading above 0 is considered bullish. The Relative Strength Index(RSI) is trending below the 50 level which indicates overall negative price momentum. The RSI is also stalling out at the yellow line which is the middle of the Bollinger Bands(volatility indicator). The RSI below the yellow line indicates a negative price trend, or potential for bearish volatility, while an RSI reading above the yellow line indicates a positive price trend, or bullish volatility. The overall trend and momentum for Bitcoin remains bearish even after the +60% jump off of the lows and was likely a reactionary bounce off of extreme oversold conditions.
COINBASE:BTCUSDShort
by PrepForProfit
CGC Likely To Lose $15 Support#CGC #canopygrowthcorp – Canopy closed last week just above a support level(blue line) that stems back to the price peak of $14.39 seen in November 2016. The most recent test of this level prior to Friday’s close was in November of 2019 which came after CGC lost -73% from a high of $52.74 in April 2019. Price bounced 80% off of support in November 2019 to a high of $25.97 in January of this year before retreating again and falling -40% to current levels. In general, the more times price tests a support level the more likely it is to fail, so the fact that CGC is testing this level again after a recent bounce from it this past November is not a good sign. The recent decline in price over the past two weeks can be attributed to overall equity market weakness due to coronavirus fears which is leading to a slowdown in total global economic activity, as well as CGC’s recent round of layoffs which saw 500 jobs lost with the closure of two facilities, and the shelving of plans for another facility which was in the works. The Price Percent Oscillator below the chart is trending below its midline(0 level) and rolling over which indicates that price has negative momentum. The green PPO line is close to crossing below its purple signal line which is a negative crossover and indication that a further decline in price is likely as negative momentum increases. Based on the current price trend and global market selloff, the probability of CGC losing support at $15 is high which may result in a further -50% decline to sub $10 and back to levels not seen since 2017. Target area is $5-$10 shown in yellow. Seeing as how CGC is the cannabis sector leader by market capitalization we can expect to see price weakness here spill over into the rest of the sector as traders look to CGC for signs of overall sector health.
CShort
by PrepForProfit
SHCOMP Gap Fill and 61.8% Fib BeatI apparently forgot the #1 rule in investing that has remained true since the financial crisis: don't bet against global central banks and their ability to maintain economic(stock) expansion. The PBOC has injected enough liquidity during this coronavirus outbreak to ease all trader fears of a market decline which has led to price filling the gap that was created around the Chinese New Year, and as of last night have now moved price back above the 61.8% fibonacci retracement level. Both lower indicators are leaning bullish with a fresh bull cross in the PPO and an RSI that looks ready to move back into bullish territory above the 50 level.
S
by PrepForProfit
Bitcoin Testing Channel SupportBitcoin took a little dip after my previous post yesterday where I was expecting a push higher and is now testing lower channel support(orange) as well as horizontal support(dashed blue). For now the trend remains bullish as long as price remains above channel and horizontal support near $9,500, but should that level be taken out it will lead to a neutral view on price. The ultimate support level that needs to hold is the solid blue line near $9,000. That is where the last base in price was made(area of demand) prior to new local highs so if that level is violated it will indicate that traders who were previously bullish at $9,000 are no longer optimistic that that price level. The solid blue line is also the stop-loss level for longs, stops should be placed just below that level.
COINBASE:BTCUSDLong
by PrepForProfit
Bitcoin Testing $10,500With Bitcoin holding above $10,000 we can start to look at new support and resistance levels as well as a new price target. For now $10,500 is the current resistance level(red dashed) and that price point stems from the massive two-day price spike back in late October 2019 which saw price jump $3k from $7,500 to $10,500, with $10,500 acting as current resistance again and the level that price needs to beat in order to see more gains. Bitcoin continues to move upward within a rising trend channel(orange) and is currently trading near the center of the channel. Any pullback needs to hold above the lower line of the channel to keep the uptrend in play, but the ultimate level price needs to hold above to maintain bullish sentiment is the dashed blue line which stems from the most recent "base" that price made before pushing to new local highs. With my trend-trading strategy, stop-loss orders are always moved up to the most recent base each time a new local high is made as the base indicates the most recent level of demand; any violation or breach of the base would indicate that buyers no longer see that level as an area of support thus potentially handing the trend over to bears. For now the trend looks to remain in the hands of bulls so I'll continue to look for upper targets, and the current upper target for price is near $11k which is where the upper line of the trend channel rests, as well as a resistance level(solid red) which has been a level of support and resistance going back to mid-2019. The PPO indicator below the chart is showing price in a healthy uptrend with both the PPO(green) and its signal line(purple) both above the 0 level. The PPO has also formed an ascending triangle pattern with a flat top and rising lower line. The expectation here is that price will break above $10,500 resistance and the PPO will break bullish up and out of the triangle thus indicating a continuation of upward price trend. In short: price needs to make a move above $10,500 in order to sustain short-term upward momentum. Upper target is $11,000. Stop-loss level is just under &9,000.
COINBASE:BTCUSDLong
by PrepForProfit
SPX Hanging ManA hanging man is a type of bearish reversal pattern, made up of just one candle, found in an uptrend of price charts of financial assets. It has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hanging man most traders say the lower wick must be two times greater than the size of the body portion of the candle, and the body of the candle must be at the upper end of the trading range. Along with a hanging man, SPX has a bearish divergence between price and the PPO indicator(orange arrows) with price making new highs while the PPO moves lower. SPX failed to move lower last week as expected on coronavirus fears, was looking for a -5% decline and only saw -2% before price ripped higher. I still feel that the full effects of the coronavirus have yet to be priced in to markets, and that traders are underestimating the chain reaction that can occur globally with the production slowdown in China. If traders are expecting the Federal Reserve to save the day with lower rates and more liquidity injections I think they'll have to give the Fed a reason to do so i.e. start panicking and send equities lower. I'm still expecting a decent pullback of -5% or more so the short-term view remains bearish, especially now that this novel coronavirus has upped its game and passed SARS in deaths. Coronavirus just did in 29 days what it took SARS 9 months to do.
SP:SPXShort
by PrepForProfit
1
SPX Gap Down and Trendline BreakSPX has gapped down this morning on virus fears and is now trading under the Kijun-sen line as well as the main uptrend line that has been propping up price during this recent rally to new all-time highs. The PPO is in a bearish cross, but remains above the 0 level which means any pullback can be viewed as bullish until that center line is violated. The RSI indicator is leaning bearish with a dip out of "overbought" territory above 70 and now crossing below the 50 level. Overall, the short-term trend is bearish until price rises back above the Kijun-sen and the uptrend line; the intermediate and long-term trends remain bullish. Thinking the likely move going forward here is a bounce back up to fill the gap sometime this week, if not then a test of the Ichimoku leading cloud may be in play.
SP:SPXShort
by PrepForProfit
Gold UptrendWhile equities have been putting in a series of bearish rising wedges, gold has two successful falling wedge breakouts on the daily chart and is looking good for a move above short-term resistance at $1,600. Price indicators are both showing a bullish trend and momentum behind price with a new advance likely coming this week. Main thing we want to see on any potential pullback is a hold above the gray arrow which represents the current support level of the uptrend. Secondary support is $1,500, price remaining above that level and bouncing again would be considered a bullish retest; a break below $1,500 would give reason for shorting.
COMEX:GC1!Long
by PrepForProfit