So every trend is upward with the exception of the Weekly, who is in a downtrend. That weekly downtrend signal was a higher low than the last time a weekly downtrend signal struck however, which fyi, was March of 2020. That is how long it had been since we had a weekly downtrend signal.
That being said, I would trade cautiously towards the upside. We are basically melting upwards, well into numerous overbought indicators, and our last higher high trend of 30m was nearly 80 points below where we sit now.
So in terms of trends, there could be more upside. However we could see some significant drawback with everything at 1-Hour Timeframe and above in severe overbought status. I would at LEAST expect things to potentially level out for a day or two even if there is more upside. While obviously this rally has been defying trends, and therefore COULD signal the end of the yearly decline we have been seeing, it isn't a safe thing and if you have made gains on this rally, make sure not to watch them dissolve in your hands, at least if you are looking on a shorter term of under a year in your investment.
So in terms of trends, look for continued growth until some reversal formations occur, at least on the micro level (5m / 15m) and especially on the higher timeframe levels.
In terms of economic data for the week;
I would mostly look at unemployment data. Not that any sort of warnings from economic data seems to be resonating with anyone, but any increase in unemployment is going to be signaling we are leaving the technical recession we are in, and heading for a full recession. Initially most firms said any recession would be in 2023, however, many have said they believe we will end this year in a recession. There is also some minor manufacturing data coming out.
In terms of Major Earnings for the week;
Few more tech companies, but in scanning over looking for larger companies it looks like most are in the healthcare, consumer discretionary, and energy sectors. I have been mentioning I would really keep an eye on the energy and utility sectors. The Energy sector is up nearly 60% on the year in a year we've had so much draw down. As people begin to have more confidence in other sectors, do people decide the energy sector has capped its profitability and take their investment money out of that sector?
In terms of economic outlook, that is about it. I post the following because I found it interesting and thought I would share the following discussion I had with a retail investor, and some economic thoughts to think on.
The Buyers Take (At least a sample of what is out there);
I spoke with a friend who had contacted me about his stocks because of how excited he was the prices were going up. I had told him that I unfortunately went into the wrong side of this upward move, and didn't understand why buyers would become so Risk On when we got a Hawkish message from the Fed, when we got two negative GDP growth readings sending us into a technical recession, and when we got higher than expected PCE showing inflation is increasing or at least not going down.
My friend actually got aggravated with me, saying that I was just a pessimist and that I shouldn't be downing the first glimmer of hope that everyone has. Hope? I asked what he was observing that had given him and his friends hope. He told me it was that price was going up. I asked him why that gave him hope, and he said because it showed him others had hope. So basically, at least in this small example of him and his ground of friends who probably only in total possess maybe a million in investments, hope is breeding hope. An interesting concept.
When I asked him if he had at least had good Earnings reports from his companies he had purchased stocks in, he told me he doesn't pay attention to that stuff, and that Earnings don't matter as they don't drive the price of stocks. This confused me, as the profitability of a company is a major driver in stocks. He said he only cares if people want a stock and the price is going up, he doesn't care how the company is doing financially. I must admit, this was a bizarre take on investing, but as we sit here with a 200 point gain in 3 days, I suppose I can't argue with his logic, at least in the short term.
That being said, here is an interesting read I came across;
The Dangers of the Bear Market Rally formation
In this article, it explained in economic foundations, what makes a bear market rally. To keep it relatively short, once the prices dump into a bear market, eventually people will at least momentarily stop selling. This doesn't mean that there isn't any interest in selling, it just means they stop selling/shorting stocks. This leaves basically only buyers to trade amongst themselves.
You may see some back and forth in terms of buyers going in, making some money, or money lost, so they sell, but then buy again, again amongst themselves. Ultimately however, the price will plateau much further down than the higher it came off of, because there isn't enough interest in buying after having entered a bear market. So with the majority of the market still seeing that things could take a turn to the downside, the minority in the market drive the price upwards. Once the buyers trade amongst themselves and get the price up, sellers come back into the market, be it in the form of someone who held their position last time or those who have been forecasting the price going down for some time.
Interestingly enough, we have made it back to the lows of just before the last big dip. A dip that just prior, many believed we were to have a rally even myself included up until 2 days before we had the dip, in which case I only became unsure, and certainly didn't realize we would have that level of drop. While there has been some decent volume the last couple of days, the majority of the movement upwards was in lower volume.
I was always told to look for a high volume whipsaw day for a reversal, but this article mentioned in a bear market rally, you may want to look for a low volume whipsaw day, as it shows the last of the buyers willing to dump money into the market are trading amongst themselves, without any real sellers. It then mentioned that as sellers come back into the market, it tends to go, and like an avalanche, just begins to came back faster and harder than before, as many buyers turn sellers to try and keep any gains, hit stop losses, or try to take minimal loss before they end up backwards.
Anyways, having never traded in a bear market (I almost did in 2019, but the Fed came in to save us from the bear market that time from a global slowdown), I found the article relatively interesting, and thought I'd share it.
That being said, I would trade cautiously towards the upside. We are basically melting upwards, well into numerous overbought indicators, and our last higher high trend of 30m was nearly 80 points below where we sit now.
So in terms of trends, there could be more upside. However we could see some significant drawback with everything at 1-Hour Timeframe and above in severe overbought status. I would at LEAST expect things to potentially level out for a day or two even if there is more upside. While obviously this rally has been defying trends, and therefore COULD signal the end of the yearly decline we have been seeing, it isn't a safe thing and if you have made gains on this rally, make sure not to watch them dissolve in your hands, at least if you are looking on a shorter term of under a year in your investment.
So in terms of trends, look for continued growth until some reversal formations occur, at least on the micro level (5m / 15m) and especially on the higher timeframe levels.
In terms of economic data for the week;
I would mostly look at unemployment data. Not that any sort of warnings from economic data seems to be resonating with anyone, but any increase in unemployment is going to be signaling we are leaving the technical recession we are in, and heading for a full recession. Initially most firms said any recession would be in 2023, however, many have said they believe we will end this year in a recession. There is also some minor manufacturing data coming out.
In terms of Major Earnings for the week;
Few more tech companies, but in scanning over looking for larger companies it looks like most are in the healthcare, consumer discretionary, and energy sectors. I have been mentioning I would really keep an eye on the energy and utility sectors. The Energy sector is up nearly 60% on the year in a year we've had so much draw down. As people begin to have more confidence in other sectors, do people decide the energy sector has capped its profitability and take their investment money out of that sector?
In terms of economic outlook, that is about it. I post the following because I found it interesting and thought I would share the following discussion I had with a retail investor, and some economic thoughts to think on.
The Buyers Take (At least a sample of what is out there);
I spoke with a friend who had contacted me about his stocks because of how excited he was the prices were going up. I had told him that I unfortunately went into the wrong side of this upward move, and didn't understand why buyers would become so Risk On when we got a Hawkish message from the Fed, when we got two negative GDP growth readings sending us into a technical recession, and when we got higher than expected PCE showing inflation is increasing or at least not going down.
My friend actually got aggravated with me, saying that I was just a pessimist and that I shouldn't be downing the first glimmer of hope that everyone has. Hope? I asked what he was observing that had given him and his friends hope. He told me it was that price was going up. I asked him why that gave him hope, and he said because it showed him others had hope. So basically, at least in this small example of him and his ground of friends who probably only in total possess maybe a million in investments, hope is breeding hope. An interesting concept.
When I asked him if he had at least had good Earnings reports from his companies he had purchased stocks in, he told me he doesn't pay attention to that stuff, and that Earnings don't matter as they don't drive the price of stocks. This confused me, as the profitability of a company is a major driver in stocks. He said he only cares if people want a stock and the price is going up, he doesn't care how the company is doing financially. I must admit, this was a bizarre take on investing, but as we sit here with a 200 point gain in 3 days, I suppose I can't argue with his logic, at least in the short term.
That being said, here is an interesting read I came across;
The Dangers of the Bear Market Rally formation
In this article, it explained in economic foundations, what makes a bear market rally. To keep it relatively short, once the prices dump into a bear market, eventually people will at least momentarily stop selling. This doesn't mean that there isn't any interest in selling, it just means they stop selling/shorting stocks. This leaves basically only buyers to trade amongst themselves.
You may see some back and forth in terms of buyers going in, making some money, or money lost, so they sell, but then buy again, again amongst themselves. Ultimately however, the price will plateau much further down than the higher it came off of, because there isn't enough interest in buying after having entered a bear market. So with the majority of the market still seeing that things could take a turn to the downside, the minority in the market drive the price upwards. Once the buyers trade amongst themselves and get the price up, sellers come back into the market, be it in the form of someone who held their position last time or those who have been forecasting the price going down for some time.
Interestingly enough, we have made it back to the lows of just before the last big dip. A dip that just prior, many believed we were to have a rally even myself included up until 2 days before we had the dip, in which case I only became unsure, and certainly didn't realize we would have that level of drop. While there has been some decent volume the last couple of days, the majority of the movement upwards was in lower volume.
I was always told to look for a high volume whipsaw day for a reversal, but this article mentioned in a bear market rally, you may want to look for a low volume whipsaw day, as it shows the last of the buyers willing to dump money into the market are trading amongst themselves, without any real sellers. It then mentioned that as sellers come back into the market, it tends to go, and like an avalanche, just begins to came back faster and harder than before, as many buyers turn sellers to try and keep any gains, hit stop losses, or try to take minimal loss before they end up backwards.
Anyways, having never traded in a bear market (I almost did in 2019, but the Fed came in to save us from the bear market that time from a global slowdown), I found the article relatively interesting, and thought I'd share it.
Note
Still no changes in trends.On the Micro Level, the 5m and 15m have flip flopped a few times, with a lower low forming on the 5m and in a downtrend and the 15m in an uptrend. If we get a push below 4114 that gives us a downtrend 15m signal, it might give us a lower low as well.
Note
It is interesting when you look at RSI in this range (around 65).We were here at 4800 (61 RSI)
We were here at 4630 (65 RSI)
We are here now at 4120 (67 RSI)
Slightly higher RSI with lower, and lower prices. Perhaps I've become bias bear at this point, but I just can't see this rally running with much more before we get a plummet. To keep prices up, the Fed will have to cut rates, and that isn't happening until at best the beginning of next year. This rally won't maintain for 6 months.
Note
15m downtrend signaled .25 higher than the last downtrend signal. So basically flat.Note
30m Downtrend now signaled at 4106Note
I was looking at Earnings again and saw a few important ones, but not substantially important as most in their sector already reported.Aug 2 - AMD (AMC), CAT (BTO), PayPal (AMC), S&P Global (BTO)
AMD could be one to watch because of Intel doing poorly. If AMD also does poorly, it could cause some loss of confidence in the Tech Sector, maybe...
Aug 3 - CVS, (BTO)
People may look at CVS to help clarify consumer spending overall, could impact the Consumer Discretionary sector.
Note
To add on that, and to add to my suspicion the energy sector could start to plummet being nearly 60% higher this year in such a bear market... I noticed there are a decent amount of energy companies reporting. They don't have the most weight individually, however, collectively they could have quite the impact.Note
LoL... I love the "Report Card" score for Earnings so far this season that caused the rally. "Less Bad" is how it has been looked at. It was bad, but not as bad as expected, and that is what caused a rally. Less Bad + Hope = Bear Market Rally.............Note
Low Volume rally over the open. Nothing new. Looks to be the same as the last few days, could potentially get back to zero, but I'm not sure about today, as we started basically 3/4 of a percent lower today. Watch for news of China hitting us economically with Pelosi's visit to Taiwan.Note
Probably don't need me to tell you that overall we went just about no where. We did see a new high for this rally, but we had a hit below 4100 for a moment also.The only timeframe I'd look at was the 30m. It hit back on the uptrend at 4143.
That puts us with a higher high and higher low, but we immediately fell below that higher high and we are below the trend line of these lower lows. Things need to stay above 4125 for the 30m to be holding above the higher low trend.
15m flipped back to an uptrend, as did the 5m, but are below both of those levels at the moment.
Also, the manufacturing data came in pretty close as expected. Perhaps slightly higher. Looks like the market had rebounded off that info at 10:00 EST. So looks like the market thinks bad news is good news, and good news is good news... lots of optimism with the price action initially, although we did finally end lower. Tomorrow could be an interesting day.
Volume was mediocre. Not low though. I'll be watching for a gap open on the lower side that might signal a bearish move finally coming.
Note
Oh, and to continue on my belief we begin to lose price uptrend in energy, we had a -2% day in energy today... I'm telling ya, that one is getting walked back. Especially as gas prices come down and Biden can resume his crusade against oil and gas companies.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.