Get started

Stonks

Stock local bottom in for a while?All 3 major US indices hit major key levels and bounced nicely. The S&P500 swept several lows and formed a nice bottom. It also hit the S3 Monthly pivot and has now reclaimed the S1 Yearly pivot, and is looking fairly strong. The Nasdaq 100 swept the November low, right before the huge rally begun, and partially filled a large gap on NDX/QQQ. The Russell 2000 hit the 2018-2020 highs, and like the Nasdaq, it essentially retraced the entire election/vaccine trade. Based on all the above, the bottom could be in, especially as the SPX corrected by 21% and the other two by more than 30%. However there are many key resistances levels above, and it doesn't feel like we've seen capitulation yet. Not only that, but not all key areas have been hit. I could see the SPX getting to the Sep-Nov 2021 highs, while the NDX and RUT would fully fill the gap from the vaccine/election trade. Essentially I'd like to see the SPX get properly oversold as so far it is simply as oversold as it was in Dec 2018, yet valuations are way more extreme and charts look a lot worse, as well as seeing the NDX & RUT hit their S3 Yearly Pivots and sweep a few more lows. For example the RUT has formed a double bottom right above the gap, and that's why I think we have at least one more push. Doesn't mean the market is going to melt down and that we'll get a huge bear market, but as the typical bear market for the S&P is about 30%, I'd like to see it at least get down there. Until then though, I do believe the SPX could get up to 4300-4400. I believe a local bottom could be in and a 10% bear market rally is possible here. My target is the key breakdown zone at 4360 that was never retested, along with the triple top at 4300. Getting up the Yearly pivot before getting smacked down again is more likely in my opinion than going straight down from here. In my opinion people got extremely bearish, while the market got extremely oversold, hit major targets and at the same time inflation seems to have peaked.
FX:SPX500
by BitcoinMacro
PLTR/USD Daily TA Cautiously BullishPLTR/USD Daily cautiously bullish. *It's become rather apparent that even after an 85% drop from its ATH, investors still aren't done selling . Taking a closer look at their financials and it's clear that they are a tech growth company that intends to be here for a while but face the reality that they may be operating in a high interest rate environment for a year or more. Financials summary: negative income since going public due to arguably egregious spending on Selling/General/Admin Expenses (that exceed Gross Profit which is $1.20b); Shareholder Equity is at $3.32b as of Q1 2022 and they have maintained minimal debt since IPO; lastly, they started producing Free Cash Flow last year in their fourth year being publicly traded and continued to do so in Q1 2022. So even though they have a healthy balance sheet and are generating positive cash flow, growth companies are often faded in favor of value companies in rising/higher interest rate environments, which helps to explain a lot of the negative sentiment.* Recommended ratio: 65% PLTR, 35% cash. Price is currently retesting $8.52 minor resistance after bouncing from the lower trendline of the descending channel from November 2020. Volume remains moderate (low) and fairly balanced between buyers and sellers as of late but is currently favoring buyers for two consecutive sessions. Parabolic SAR flips bearish at $7.13, this margin is neutral at the moment. RSI is currently trending up at 42.48 but is still technically testing the uptrend line from 01/27/22 as resistance at ~40; if it can continue surging, the next resistance is at 46.81. Stochastic crossed over bullish in today's session and is currently trending up slightly at 93 as it tests 89.92 resistance; the next resistance is max top. MACD remains bullish and is currently trending up at -0.90 as it quickly approaches -0.81 resistance. ADX is currently trending down slightly at 39 as Price is attempting to establish a short term bottom, this is mildly bullish. If Price is able to break out above $8.52 minor resistance, the next likely target is a test of $10.44 minor resistance. However, if it gets rejected here then it will likely retest the lower trendline of the descending channel from November 2020 as support at ~$7.31 before potentially heading lower. Mental Stop Loss: (two consecutive closes below) $7.39.
P
by dailytaguy
SPX/USD Daily TA Cautiously BullishSPX/USD Daily cautiously bullish. *The VIX is heading down, USDX down, Gold down and for the first week in years, crypto is decoupling from equities as it has gone down while equities have gone up. Risk-on investing is starting to lose favor in crypto due to a multitude of reasons but mainly because most market speculation was concentrated in crypto. What is shaping up to be a Bear Market Rally, that may very well run into next month, will face a big challenge when the Fed begins to reduce their balance sheet of security holdings (treasury and mortgage-backed securities) on June 1st and the FOMC releases a statement after they regroup on June 14-15 regarding another funds rate hike (Fed is committed to at least a 50 bp rate hike in both June and July).* Recommended ratio: 70% SPY, 30% cash . Price bounced off of $3939 (second time in eight sessions) and is currently on the verge of testing the lower trendline of the descending channel from August 2021 as resistance at ~$4090 (also for the second time in eight sessions). Volume remains high (moderate) and is on track to favor buyers for a second consecutive session. Parabolic SAR flips bearish at $3813; this margin is neutral at the moment. RSI is currently trending vertically at 48 as it quickly approaches a formal retest of 52.68 resistance. Stochastic remains bullish and is currently trending up at 83 but is still technically testing 76.29 resistance. RSI remains bullish for a second consecutive day and is currently trending up at -84.13 as it quickly approaches -76.22 minor resistance. ADX is currently trending down at 28.42 as Price is surging, this is mildly bullish at the moment. If Price is able to breakout above the lower trendline of the descending channel from August 2021 at ~$4090, then the next likely target is a test of $4175 resistance before potentially moving higher. However, if Price is rejected at ~$4090, it will likely retest $3938 minor support before potentially falling lower to $3706 minor support. Mental Stop Loss: (one close below) $3938.
SP:SPX
by dailytaguy
Stocks Tepidly Pull HigherStocks have drifted upwards, testing the upper bound at 3978. This is roughly the midpoint of the failed inverse head and shoulders pattern that we have been referencing the past few reports. Recall that such a failure in this pattern is a bearish sign for stocks, and what we are witnessing is to be expected. The S&P 500 has been in the doldrums and can barely muster the strength to test the midpoint of the pattern, let alone the neckline of the inverse H&S at 4068, which will continue to be a barrier even if we can muster a rally. On the downside, 3825 should remain a lower bound for now.
FX:SPX500Short
by quantguy
S&P 500 Unable to Clear 4000Stocks have been wavering at lower levels and just can't seem to break 3978. This is a technical level, about midway through our inverse head and shoulders pattern. This lackluster behavior is to be expected as the break down from the inverse H&S pattern is a very bearish sign, and portends strong resistance if we do try to inch back up and test highs. The neckline at 4068 will be an incredibly difficult barrier, as we are clearly seeing. We should see support from around the level corresponding to the 'head' in the low 3800's. If not, we are clear to test the 3700's.
FX:SPX500Short
by quantguy
Stocks Still WobblyStocks have made an attempt to recover from Friday's selloff, but we have met strong resistance at 3978, about midway through the failed inverse head and shoulders pattern. We noted that this is a very ominous sign for stocks and in the past, from which it will be difficult to recover. It also suggests that 4068 (the necline of the inverse H&S) will be a very tough level to break, and currently, the S&P 500 does not seem to have the momentum to even test this. The Kovach OBV is extremely bearish, suggesting we are due for a relief rally. However if the selloff continues, expect support at 3810 again.
FX:SPX500Short
by quantguy
SPX/USD Daily TA Neutral BearishSPX/USD Daily neutral with a bearish bias. *St. Louis Fed President James Bullard said he remains committed to a 3.5% fed funds rates at the end of 2022 with potential for rate decreases in 2023; Fed Chair Jerome Powell also said Fed would not hesitate to raise rates beyond what is considered "neutral" until inflation comes back down; unemployment remains low but economic growth is slowing and inflation is rising, so the case for stagflation isn't necessarily getting weaker.* Recommended ratio: 45% SPY, 55% cash. Price is currently testing $3938 minor support-turned-resistance after briefly touching $3800. Volume remains moderately high and has been fairly balanced between buyers and sellers for the past six sessions. Parabolic SAR flips bullish at $4035, this margin is mildly bullish. RSI is currently trending up at 40.68 and is still technically testing 38.06 resistance; it should be noted that RSI recently defended support at both uptrend lines from August 2015 and January 2022, this is bullish. Stochastic remains bearish and is currently on the verge of crossing over bullish at 36.31. MACD remains bearish and is currently trending up at -107, if it can break above -103 then it would be a bullish crossover; the next resistance is at -76.22 while the next support is far below at -226. ADX is trending up slightly at 30 as Price is currently avoiding a breakdown to $3706, this is neutral at the moment. If Price is able to reclaim minor support at $3938 then the next likely target is a retest of the lower trendline of the descending channel from July 2021 at ~$4100 as resistance. However, if Price breaks down here, it will likely test $3706 minor support before potentially heading lower to $3508 minor support. Mental Stop Loss: (two consecutive closes above) $3938.
SP:SPX
by dailytaguy
TWLO/USD Daily TA Neutral BullishTWLO/USD Daily neutral with a bullish bias. *Twilio has fallen 81% from its ATH ($457.65) and is approaching the end of a massive Falling Wedge from March 2021.* Recommended ratio: 55% TWILIO, 45% cash. Price is currently testing the lower trendline of the Falling Wedge from March 2021 at $100.65 support. Volume has been shrinking since early May as Price trades within the second largest supply/demand zone on the chart; this is mildly bullish as it is indicative of an incoming breakout (due to it being a Falling Wedge the bias is to the upside). Parabolic SAR flips bullish at $105, this is mildly bullish. RSI is currently trending down slightly at 40 as it continues testing 37.47 support for the sixth consecutive session. Stochastic remains bullish and is currently trending up at 85; the next resistance is at max top. MACD remains bullish and is currently trending up slightly at -10; the next likely target is a test of the descending trendline from May 2020 at -4.57 resistance. ADX is currently trending sideways at 33 as Price is attempting to establish support at $100, this is neutral at the moment. If Price is able to defend $100.65 support then the next likely target is a test of the upper trendline of the Falling Wedge at $120-$125 (this is also the largest supply/demand zone on the chart) before potentially breaking out of the formation to the upside. However, if Price breaks down below the lower trendline of the Falling Wedge at $92.60, the next likely target is a test of $70 support. Mental Stop Loss: (two consecutive closes below) $95.50.
NYSE:TWLO
by dailytaguy
Can Stocks Recover from Lows?Stocks have recovered from Friday's selloff. Though we have fully retraced from that dip, we remain under 4000, and well below the neckline of that failed head and shoulders pattern discussed last week. The fact that we broke down from the inverse H&S is foreboding and that we broke lower than the head (relative low) of this pattern is even worse. The Kovach OBV is extremely sold off, so we may have some hopes of a relief rally. If so, 4068 will be a formidable barrier to the upside. We should find support again at 3810 if we sell off further, but the next support level after that is in the 3700's.
FX:SPX500Short
by quantguy
Zoom out for a clearer picturethe stock market has finally reversed some of its amazing gains from the previous years of free fed money. The couple of lines i have drawn are crucial to watch because 1 st line. They were the highs which market breached before the rally 2 nd line those are the lows of the 2020 covid dump. These are 2 areas where there was buying pressure. Technically bollinger bands are indicating volatility in the markets - the last 2 recessions - during the dot com bubble markets fell about 50%, and again ~50% during the 2008 recession. How much this time? no one knows. its already down 20% from previous high, As traders, we can only manage the risk we take. Without taking risk you can't make profits. Good luck all. Be careful!
AMEX:SPY
by one-two
QQQ Bear FlagIn a normal less volatile market (ie; a full on bull market) double bottoms are a nice spot to re enter or scale bigger long. In this market after yesterday's big down day (flag pole) and today's sideways chop with real indecision you lean into the larger pattern on cash only session charts (bear flag). Fully expecting SQQQ to attempt to hit the last remaining VWAP (century @ $80) and TQQQ to possibly go much much lower. Without a freak bounce tomorrow consider not longing the Q's for some time it may be even more painful after bulls officially give up this area. Be careful folks. For reference $TQQQ's last century vwap is I believe all the way down at $14-$15...crazy right? Maybe not and time will tell.
CME_MINI:NQ1!Short
by Todoubled23
23
Stocks Looking WeakAs predicted here, stocks have fallen from a failed inverse head and shoulders breakout. We were able to predict this due to the incredibly weak 'breakout' from the neckline at 4068. We also noted that this was a very bearish omen, and called out the exact level of support at the head of the inverse H&S at 3887 or so. Currently, we are seeing a bit of support here, but the brief rally is nothing compared to the magnitute of the previous selloff, and this is confirmed quantitatively by the Kovach OBV, which is still incredibly bearish. If we fall further, its uncharted territory, but we should have support at the base of the 3800's. If we somehow muster the strength for a rally, then we must break 4068 before testing higher levels, which is a barrier for now.
FX:SPX500Short
by quantguy
2
VIX Daily TA Neutral BearishVIX Daily neutral with a bearish bias. *VIX (Volatility Index for SP500) has gradually been rising since November 2021 for a variety of reasons but mainly having to do with supply chain reorganization (due to Covid and geopolitics) and the Federal Reserve transitioning from QE to QT.* Recommended ratio: 45% VIX, 55% cash. Price continues to trend within the ascending channel from October 2021 and is currently testing 30.98 minor resistance after bouncing from the 50 MA at 26.60 support. Volume has been picking up and is the highest it's been since 03/29/22 . Parabolic SAR flips bullish at 34.31 (which currently coincides with the upper trendline of the ascending channel from October 2021). RSI is currently trending down at 51 after being rejected by both the uptrend line from 03/28/22 and the descending trendline from 04/26/22; the next support is at 35.65. Stochastic remains bullish for a second consecutive session after bouncing from 10.96 support and is currently trending up at 27; the next resistance is at 54.24. MACD remains bearish and is currently trending sideways testing 1.20 support for a fourth consecutive session as it attempts to break above 1.65 to form a bullish crossover. ADX is currently trending down slightly at 21 as Price is attempting to break back above 30.98 minor resistance; if Price can reclaim 30.98 and ADX bounces, this would be bullish. If Price is able to close above 30.98 minor resistance one more session, the next likely target is a retest of the upper trendline of the ascending channel from October 2021 at around 34.50. However, if Price is rejected here then it will likely retest 26.60 support. Mental Stop Loss: (one more close above) 30.98. *Price refers to Index value when it comes to VIX seeing that it's just a gauge of volatility... to trade VIX you would need to trade VIX futures like VIXY or VXX*
CBOE:VIX
by dailytaguy
Your strategy will inevitably go through a Drawdown!Your strategy will inevitably go through a Drawdown. And there's nothing you can do about it to stop that. However, you can learn how to survive it! Today I will give you actionable steps, that you can use for the next time the market hit your strategy and you feel that everything is going wrong. Let's start with an idea of what a drawdown is, and why drawdowns happen. There are an infinite amount of trading strategies and tools that people use to trade and take advantage of specific market conditions. Some traders are better in trending markets, they trade breakouts. Other traders feel more comfortable in ranging markets, where they trade quick reversals on key levels. The Math is simple here. Trending strategies will have a poor performance on ranging markets, while reversal strategies will have a poor performance on trending markets. Detecting the beginning and end of trending cycles or ranging cycles, is blurry. So, if you agree with that, as I do, you can expect your strategy to start failing at some point. And that's the beginning of the drawdown. (This is true for the best traders in the world, as for the worst traders in the world. Nobody scape drawdowns, the quickest you accept this, the faster you can learn how to handle them properly) So let's start by saying that drawdowns are situations where your strategy experiences a lasting decline in performance, even if you are doing everything perfectly. Drawdowns, happen because strategies are made to take advantage of specific anomalies that can be found in one part of the market cycle, and when that market cycle finishes, or changes, your strategies become less accurate. -------------------------------------------------------------------------------------- It's important that you become aware of the Psychological consequences of Draw Downs , so you can have a countermeasure for this. Let's take a look at the most common ones: 1) Decrease in confidence (constant negative thoughts about your system) 2) Fear of entering the next trade. 3) Thinking about changing things in your strategy (deviations from the original plan) 4) Thinking about modifying the risk you are using to cover losses quicker. 5) Ceasing your trading execution, and looking for a new strategy. ALL THESE ITEMS, are the main situations you may start feeling when going through a drawdown. IF you are going through that, it's important that you understand that you are under a delicate emotional state, where your confidence is low, and you are prone to make more emotional decisions that 99% of the time, tend to increase the drawdown. So the way we handle drawdowns is by having logical and systematic processes in place instead of emotional ones. -------------------------------------------------------------------------------------- Here you have actionable steps to handle drawdowns: STEP 1 : You handle drawdowns by getting ready before they happen, not when they are happening. This is true for almost all disciplines, not only for trading. Airplanes have clear plans in case things start going wrong, instead of figuring out the problem at the moment, pilots go to the manual book, and use the template for this situation, plus the fact that they trained those situations several times in simulations. So, if you want to understand what a drawdown situation looks like in your strategy, you MUST go into the past, and when I say this, I'm not saying making a 3 week backtest. You need to go as far as you can in the past, to find that exact moment where your strategy is not working as expected. How many consecutive stop losses do I have? 3? 5? 15? 20? How long does this period last until everything goes on track again? 1 month? 3 months? or a year? These are the kind of answers you are trying to solve. When doing a backtest you are trying to understand two things. The first one is if your strategy has an edge. The second one is how hard you get hit when things go wrong! STEP 2: Work your risk management around the stats of your system. Imagine we reach the following conclusion "I have a system, that executes 10 setups per month" and the worst-case scenario I have found is 20 consecutive stop losses during 2 months. What I would personally assume is that 20 consecutive stop losses can be 30. So how much capital percentage should I risk on this system so I don't get knocked out if this TERRIBLE scenario happens. The answer for me would be 1% per setup. Under the assumption of this unique scenario, I would be 30% down, which is something acceptable, compared to the drawdown of conventional investment vehicles like S&P500 where we observed those kinds of declines, in the last years. The main point here is that you need to adapt the risk you are using on the strategy, to the stats of it, and your risk tolerance. -------------------------------------------------------------------------------------- Let's recap the key aspects of this post. 1) Drawdowns are inevitable, your strategy will be hit by this scenario eventually. 2) Drawdowns cause an emotional disturbance and are the main reason why people make really bad decisions. 3) We handle drawdowns by getting ready in advance. Through backtest, we can understand the edge of our strategy and the worst-case scenarios. 4) We adapt the risk of our strategy, by considering a terrible scenario, like 30 consecutive losses. This will not eliminate the feeling during this period, but it will bring you a work frame to make logical decisions based on data, instead of emotions. Implementing this type of thinking will make your strategy more robust, it will help you go through these situations, and most importantly it will protect you from making stupid things with a strategy that has an edge, and actually works! Thanks for reading!
BITSTAMP:BTCUSDEducation
by ThinkingAntsOk
129
Stocks Break Down HARD from Failed Inverse Head and Shoulders!!As predicted yesterday, stocks broke down hard. Recall that we observed that the breakout from the inverse head and shoulders pattern in the S&P 500 was looking extremely weak. This is usually a very bad sign and portends a dramatic failure. Indeed, we note only rejected current levels but completely retraced the entire pattern, currently finding support at 3887, the head of the pattern. We can expect support here, but if it does not hold, we are set to make new relative lows which is a very ominious sign. The neckline at 4068 is likely to be a prohibitive upper bound for some time, as is usually the case with failed H&S patterns.
FX:SPX500Short
by quantguy
SPX/USD Daily TA Cautiously BearishSPX/USD Daily cautiously bearish. *Amidst slowing economic growth and rising inflation Janet Yellen , Ben Bernanke and various economic pundits are vocalizing their concerns for prolonged stagflation in the short to medium term -- this and weak economic data from China (primarily due to lockdowns) is fueling broader fears of the Federal Reserve potentially not being able to execute a 'soft landing' like JPow wishes.* Recommended ratio: 30% SPX, 70% cash . Price was rejected by the lower trendline of the descending channel from July 2021 and is currently forming a Bearish Engulfing Candle as it retests $3938 minor support. Volume remains moderately high and is fairly balance between buyers and sellers in recent sessions but has favored sellers in seven of the past ten sessions. Parabolic SAR flips bullish at $4109, this margin is neutral at the moment. RSI is currently retesting 38.06 support; if it breaks below, the next support is at 16.67 (which would coincide with the uptrend line from 02/27/22). Stochastic remains bullish and is trending down at 49.43, if it breaks below 44.62 it would be a bearish crossover. MACD remains bearish and is currently trending down at -106 after failing its third attempt at a bullish crossover; if it can break above -100 it would be a bullish crossover, but if it can't the next support is the ATL at -236.13 (Covid crash in March 2020). ADX is trending sideways at 27 as Price is currently being rejected, this is mildly bearish; if ADX can continue trending up as Price falls then it would be very bearish. If Price is able to defend minor support at $3938 then it will likely consolidate before retesting the lower trendline of the descending channel from July 2021 at ~$4000. However, if Price breaks down here, it will likely test $3706 minor support before potentially falling to $3508 minor support. Mental Stop Loss: (two consecutive closes above) $4000.
SP:SPX
by dailytaguy
2
SPX/USD Weekly TA Cautiously BearishSPX/USD Weekly cautiously bearish. * CPI continues to go up since April 2020 (and for some commodities like bread, milk and oranges since mid-2019), Finland and Sweden officially apply to join NATO , the Fed remains committed to increased funds rate to ring in inflation, mid-term elections in the USA are underway and Republicans currently have a slight lean , supply chains are still getting battered by Russia/Ukraine & China lockdowns -- the overarching theme for equities remains a return to true value.* Recommended ratio: 30% SPX, 70% cash. Price is currently testing $3950 minor support for the second consecutive week. Volume remains moderate and is on track to favor sellers for seven consecutive sessions. Parabolic SAR flips bullish at $4652. RSI is currently trending down slightly at 32 as it approaches 25.26 support ( which would coincide from the uptrend line from October 2008 ). Stochastic remains bearish and is currently trending sideways at max bottom; a break above 4 would lead to a bullish crossover. MACD remains bearish and is currently trending down at -104 with no signs of trough formation; the next support is the ATL at -125.20. ADX is currently trending up at 29 as Price continues to fall, this is bearish. If Price is able to defend $3950 minor support, the next likely target would be a test of $4167 minor resistance. However, if Price breaks down here then it will likely retest $3722 support for the first time since March 2021. Mental Stop Loss: (one close above) $4167.
SP:SPX
by dailytaguy
Stocks Struggle to Continue the RallyThe S&P 500 had a very humble breakout from the inverse head and shoulders pattern we identified yesterday. Recall that we noted an inverse H&S pattern with a neckline at 4068. We suggested that if it broke out from this, we could easily test the 4100's. We did see a bit of a bounce past 4068, but nowhere near the momentum we'd expect from a breakout. Indeed, we weren't able to even clear 4100 before running into resistance. Though the Kovach OBV has tapered up slightly, this is nowhere near the momentum we'd like to see off a proper breakout. If we reject the breakout it is a very bearish sign indeed. We could easily retrace through the vacuum zone to 4009, or even test the 3K's again. If we are able to break out, then 4122 and 4144 are the first targets we will have to break before considering higher levels.
FX:SPX500Short
by quantguy
2
Inverse Head and Shoulders in Stocks?? 📈🤑Stocks appear to be forming the inverse head and shoulders pattern that we predicted would form yesterday. The "head" of the pattern extends down to the low 3900's with the neckline at 4068. We are seeing resistance from 4068 confirmed by several red triangles on the KRI, but if we are able to break out from here, then the 4100's are reasonable, in particular 4122 and 4144. The Kovach OBV is still very bearish and has flatlined suggesting we will need more momentum to come through, perhaps at the US open, before we can expect a breakout.
FX:SPX500Long
by quantguy