OUTLOOK FOR THE MAJOR INDICES
All of the major indices have been in a major downtrend since last November. All of them are also near resistance of the long term price channel they have been traveling down within. Many people are waiting for the market to pick a direction here. Will the major indices break out to the upside? Or will there be a major rejection to the downside which would basically keep us within this long-term downward price channel?
In the first three charts below you can see futures prices for the NASDAQ, S&P 500, and the Dow Jones Industrial Average. All of these features indices have their prices near the long-term resistance. A breakout above This resistance level would officially end the downward price channel. Personally I would not enter into any major long or short positions for the midterm or long-term until the market picks a direction from this resistance level.
In the next three charts you can see the 4-hour candles for each of the major indices mentioned above. Notice the 4-hour price channel that each of these indices are traveling within. There's a lot of upside momentum in these 4-hour channels. The momentum does not appear to be slowing down at all. So be cautious if you are looking for it a price point to enter into a short position.
Price action can be somewhat tricky sometimes around resistance levels or support levels. Typically you will have many investors stepping in at these levels so there will be increased volume and volatility. Sometimes you will see and obvious breakout or rejection of a technical level. A lot of times you may see some whipsaw price action associated with these levels as well. Another price move to watch out for is the break out and then a retest of the resistance level that will have become support in that instance. I've illustrated the potential price action moves in the chart below. It doesn't matter what the angle or the slope of the trend line is, the price action will still exhibit these properties.
The best thing to do is to wait for the market to pick a direction from this long-term resistance level. Once the market picks a direction and it is a clear direction then you can have confidence in your long or your short position. you can make a lot more money if you correctly predict the direction and you get in early. But that can be very risky sometimes.
If you are following one of these indices extra closely then you should follow the heavy weighted allocations within the index. I have the heavy weights listed below. And there has recently been a reshuffling in the indices so the allocation percentages have recently changed.
Will the market break above the long-term resistance I mentioned earlier and go bullish? Or will the market stay within this long-term downtrend and essentially stay bearish?
$SPDR S&P 500 ETF(SPY.US$ $SPDR Dow Jones Industrial Average Trust(DIA.US)$ $Invesco QQQ Trust(QQQ.US$ $iShares Russell 2000 ETF(IWM.US$ $VIX Index Futures(MAY4)(VXmain.US$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf(UUP.US$ $iShares 20+ Year Treasury Bond ETF(TLT.US$ $SPDR Gold ETF(GLD.US$ $iShares Silver Trust(SLV.US$ $Crude Oil Futures(JUN4)(CLmain.US$ $Ishares Iboxx $ High Yield Corporate Bond Etf(HYG.US$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf(LQD.US$ $Copper Futures(JUL4)(HGmain.US$
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SpyderCallOP : @BeBlessed
SpyderCallOP : @Koolersometimes the negative divergence like you mentioned can lead to a downtrend. but sometimes the negative divergence is just the indicators cooling off during the hot rally. because even the indicators cannot go straight up.
and typically indicators look like that during a rally because investors slow down the buying momentum as the rally gets higher and higher based off of the risk of buying at the high. but when we get that one more push up all the indicators will possibly bounce if the market stays bullish. but it is interesting how we have the negative divergence near this long-term resistance level. that's very interesting good pointing that out.
71084910 SpyderCallOP: In the general environment, everyone knows that poor liquidity is not OK. The stock market will always fall within the next few months or six months, and even if it breaks through the resistance level, it will fall. Obviously, some forces are operating, but it's not time to ship yet. Once the bulls are very high and the bears have run out of bullets, it's time to drop. The best thing to do now is save up bullets to deal with this troubled world.
SpyderCallOP 71084910: I was wondering if the market will go sideways over the next year and a half or so. I'm not sure if we will reach the previous highs from last November. I'm assuming that all depends on the feds quantitative tightening.
rambotrout69 71084910:
BeBlessed SpyderCallOP: Appreciate much
BeBlessed BeBlessed: I had actually opened a Short last Friday, when DJ spiked up during closing in the last 5mins.
Why I short - seen several sharing their charts, and opinions that the major indices and even SPY likely to pullback. Plus upcoming week is the results announcement by retail giants (Target & etc). Hence I'm betting on these two.
Macro environment doesn't look that rosy although the CPI and consumer sentiments showed otherwise.
Lets see what brings next week. Wish me luck~ Wish you luck on your positions too
SpyderCallOP BeBlessed: best wishes. good luck for sure
Butcher71 : I am not convinced of that it’s a true reversal yet - yields are still ridiculously high; not that 8.5% CPI is glorious and VIX has yet to have the final say after >40days compression.
Giovanni Ayala : Depends how everyone is accomdating
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