Trends going into 7/11/2022 and Data to WatchThe 1-Hour Trend Flipped from it's previous Uptrend to a downtrend overnight. That prior uptrend definitely served its purpose and it was only a matter of time.
With that said, we are beginning to see that low volume and relatively weak up push of last week finally fade out and that bearish double top begin to show it is coming to bring direction to the market. Don't expect a sudden plummet quite yet though, as we have 3 decent timeframe trends all circling the wagons and ready to show they aren't over yet. This is evident as the 1-Hour Downtrend signaled, it touched the 4-Hour Uptrend level and immediately got pushed back. As of writing this the 1-Hour has failed to close below it's signal level.
The 2-Hour, 3-Hour, and 4-Hour Uptrends are within a 4 point range. I'd expect some decent resistant getting through and staying through all 3 of those. HOWEVER, if we do push lower, look for the candlesticks to CLOSE below the respective timeframe trends signal area. If price is able to push below those numbers, there is no uptrend signal left to stop a further move to the downside unless a small push upward flips the 30m Downtrend to and Uptrend signal. However, that 30m downtrend signal is relatively fresh and it would take a nice size dip down and then big movement up to create that. Any chance for this price moving further up is going to first require a 6-hour candlestick to close above 3896, and then a real push up is going to need a 12-Hour candlestick to close above 3927. The upward price action definitely seems to have fizzled out around the 6-Hour Uptrend signal, at least for now.
So, overview, Downtrends as of the morning of 7/11/2022 are;
D, W, 30m, 1-Hour
Uptrends are;
12h, 6h, 4h, 3h, 2h
Price seems to be stuck between the 6-Hour Uptrend of 3896, and the 1-Hour Downtrend of 3868, using the 30m level as a support and resistance line as it passes through and closes on either side.
As for Economic Data;
So, without a doubt CPI data will be huge this week as we find out about inflation. However, in checking into earnings reports for the week, Earnings season is clearly ramping up with 16 companies reporting. Of most importance, Pepsi has a BTO Earnings on the 12th, JP Morgan and Morgan Stanley have BTO Earnings on the 14th, United Health and Wells Fargo have reports BTO on 15th. These earnings may end up causing a bigger fluctuation in price action than the CPI. While inflation is important, expected earnings is really what makes investors (outside of Day & Swing Traders) purchase individual stocks.
There is some belief that forecasters are aware that companies will miss on earnings forecasts, but that they don't want to adjust it now, because it will create a tumble down the hill. If they update it this close to Earnings, then investors will lose confidence, those companies will appear to be failing, and consumers will ultimately feel less confident with their respective services, thus causing additional missed earnings, then still missing earnings forecasts, and causing a second dip in valuation. Many investors are going to be watching to see if a lot of companies come up short, and if they do, they will lose confidence in other companies within the same sectors, if not earnings in general because it may begin to prove the theory of incorrect earnings forecasts correct.
That may be the catalyst that drives us to new lows, and then I'd expect the market to begin to price in a possible inflation or at least low expectations until September.
So overall, I'd expect some whipsaw movement today between the 6-Hour and 1-Hour marks to start the week, though I think we are likely to see things go slightly lower. Overall, there is some belief that price could go up close to 4000 before a plummet, so those pending bears are still looking for long positions as bulls until then. The beauty of trading off trends is you don't have to predict the market, you get to react to the market.
Overall, my sentiment is remaining bearish, and I'd estimate a 65% we end lower today by EOD.
Remember always, your risk management plan is the most important part of your trading strategy!
Disclaimer - This is not Official Investment or Financial Advice
