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SPX: A new crash ahead?Hello traders and investors! Let’s study S&P 500 and try to figure out the meaning behind the recent movements. The problem is that SPX lacks strength to go up in such a decisive moment. The yellow line around 3310 is a pivot point that could take the index to lower levels. The red line around 3280 is a natural target, but since it is too close, I’m not sure if it could hold the price, especially in such a complex scenario. The situation is particularly dangerous not only because SPX is showing weakness near its All Time High, but because it focused too much on a few stocks. If we look at the chart below, a lot of stocks already lost their 50-Day Average, along with the 200-Day Average, and they have a clear top in June. But SPX did record highs since June. This means that the money is focused on few stocks , that are taking the whole index up with them. This situation makes the market extremely vulnerable. What stocks are carrying SPX? Probably, the big famous FAANGMs. Together, these 6 companies alone are responsible for more than 20% of S&P 500. Let’s remember that S&P 500 is made of 500 companies. They are big and relevant, and since they soared this year, if they do a pullback, SPX would feel. A pullback to what point? Look at the FAANGMs chart below: They are starting to get closer to their 21 ema, which is good, but they have a clear bottom zone at the blue line. If lost, the pullback will be sharper, and they are going to seek further supports. The Support Level 1 is a reasonable target to aim, at least right now. Beyond this point, we have the Support Level 2, but I’m skeptical about it. It seems the FAANGMs are living in a separate world, and they are getting more and more distant from the real stock market, as we can see by looking at this chart: Since the February Crash, they are soaring to higher levels, and this is a warning. If they do a correction to the levels mentioned above, I wonder what would happen to SPX. Would the money simply flow from the FAANGMs to other stocks, creating a boring congestion that would last for a few months? Or the sell-off on these 6 stocks would scare the investor and the index will crash along with them? We can’t be sure for how long they will continue to carry the market, but the Price Action will always help us to understand the current market’s psychological moment. It doesn’t matter why or how it is going up, what really matters in the end, is that we traders must know how to make money, regardless of the circumstance. And if you found this idea interesting, please, support it, and follow me to keep in touch with my daily analyses! Probably you’ll find something interesting around.
SP:SPX
by Nathan_The_Finance_Hydra
22
oh SNAP...is that a reverse H&S or are you just happy to see me?Looking at SNAP it's been gaining some steam in the past months, Seeing more than 200% gains off the March lows. Not only that, but arch-rival FB has been in hot water all year and there's concern about their business being broken up to prevent monopolistic practices. Is this an opportunity for SNAP? Is this an opportunity for you? With that being said, a strange and exciting pattern has formed in this chart. What's more, is the potential impulse wave that is forming on the chart and the steady volume to go with it! Now the Risk to Reward setup here really depends on your how much you are willing to lose to bet on some gains on a breakout? Depending on your time range, you could make a quick buck and then keep some SNAP for the new 3rd wave cycle that could then form if we do reach new All-Time Highs (ATH). BUT... if we are dreaming through our SNAP spectacles again, then we could be willing to take up to a 25% loss to gain 30-40% and then have a nice set up for a larger swing trade. I'm already in this one ever since the 4 Tech Titans were on the hot seat in front of Congress. After making this chart I might want more. What do you say?
NYSE:SNAPLong
by Shadowfigure
AAPL, Long above $119, Short under $109! Apple stock has been extremely interesting recently. We saw it reach a $2T market cap, split 4-1, reach new highs day after day and most recently drop 20% from an all-time high. All in less than a month. So the real question is, where can Apple go from here? There are two scenarios. It's difficult to say Apple will bottom out here or it will for sure keep dropping. It has dropped quite a bit but there is the possibility for an even bigger spill to correct the markets a little better to a more real valuation. Apple's bear case is a little stronger than the bull. We have the September rebalance to look for. We also have not seen the complete rebalance of the US equity indices. based on technicals we have seen that Apple has managed to close it's downside gap and that typically happens before a slight spill. The real tell of the downside on Apple is the massive consolidation that we saw earlier in the summer between $108 and $115. There is a huge volume block there based on the volume profile. If we manage to hold that out as we have seen very recently, we are most likely going to make a push back to all-time highs. However if that pivotal level and red box break, we're going to see a downward push most likely into the 200-day moving average and potentially in the prior broken all-time high that was an area of consolidation. The 200-day moving average is first at $108, so that becomes an easy test of a level. The more aggressive bear level is if we break that consolidation period and we tumbled back into the prior broken high at $98-$99. This would be the real pullback and rightfully so an area to stall. There is massive volume there and it was a prior top, so that means there would be a lot of long money interest should that level be tested. This is for educational purposes, not investment advice. All traders are responsible for their actions in the markets. Trading involves substantial risk, I would recommend being aware of that risk and being well educated on the matters before proceeding.
Editors' picks
NASDAQ:AAPL
by TRADEPROAcademy
8
FAANG Index Short interest Increases!We saw that tech had led the majority of this rally, retail or not. the tech rally was the center of attention. Which is focused around the largest tech companies we all know. Facebook, Amazon, Netflix, Google, and Apple. Together they have a Market Cap of over $5.6Trillion. Making up over 35% of the Nasdaq Index. If we include the honorary FAANG member, Microsoft we drastically start to inflate the previous numbers and the impact of a few big tech companies on the market. The FAANG and MSFT make up more than 25% of the S&P 500 as well. So this handful of stocks has the potential to move entire markets. Which it has done. The Nasdaq hit an all-time high day after day, so did the S&P 500 at some point this summer thanks to the FAANG index and the tech stocks leading the way. This most recent sell-off has taken off over 5% in the biggest US indices. We saw the FAANG collectively drop about 15-16% from all-time highs. however, that sell-off was signaled by a few things and has signaled that there is more to come. Here is why keeping mind both technical and fundamental reasons. First off, we pressed into an all-time high after an all-time high in a summer market where the volume is thin and the trading is thin. Meaning the highs we not on strong volume. In this case, we also had the largest market cap company ever split, Apple did a 4:1 split. Historically meaning a lot of profit-taking after the post-split pump. This was also the case for Tesla, which is included in the Nasdaq but still waiting for the S&P 500 invitation. The next case for the downside was not only the overvalued market but also the "September theory downside" Which is something that has plagued markets for 40 years. On average over the past 40-years, September has ended red. Why? Because 1, the fund managers, institutional investors, or just big money coming back to the desk after labor day and doing some market movement or rebalancing. Which is just in time for the end of the third quarter. Rebalancing their funds after seeing tech gain 50% on average this year means drastic profit-taking. Which is why there is more downside to come. We just needed to see a slight rebound before seeing the continued downside. It's the equivalent of buying highs. You don't want to sell lows even if you are profit-taking. Another interesting aspect is the strength that Biden gets throughout the election campaign process. The more ground Biden seemingly gains the weaker the market looks. Which could be a future indicator of what we could see throughout the election. There are 3 scenarios we want to outline for the future of the FAANG and the overall market indices. There is a more perceived downside throughout September. This is due to continued rebalancing and profit-taking anticipated to take place in the market. Taking advantage of the weak volume to the upside. Scenario 1:The first being the FAANG drops down to tag the Nasdaq's perceived downside. In order for that to happen though, We'd need to see the rest of the 75% of the Nasdaq hold out without falling or even slightly climb. This doesn't seem that probable, the big stocks in the FAANG pave the way for how the rest of the Nasdaq stocks will most likely react. This would mean the Nasdaq stays relatively flat while the FAANG falls another 11%. This is an unlikely scenario because if the FAANG drops, Nasdaq will probably get killed. Scenario 2: This is the least likely scenario out fo the 3. Involving the Nasdaq climbing while the FAANG drops about 5% to meet somewhere in the middle of the current divergence. That is highly unlikely because if the FAANG drops, the NQ is dropping almost for sure. Scenario 3: The last scenario involves downside in the FAANG due to continued profit-taking and rebalancing out of the major tech stocks. Which would push the Nasdaq down to the -15% mark, as it is already through the -10% mark from highs which marks a correction? In this scenario, the FAANG will continue to drop and some of the big tech stocks would be more than 20% off highs into a more "natural" valuation. This scenario is the most likely out of them all. To conclude it does seem like there is more downside as a lot of the FAANG and tech stocks are overbought and a lot of investors are profit-taking after such incredible gains. We could see the tech stocks pull back into their summer consolidation prices which would be a great area to look for the reversal. Trading Involves substantial risk, every market decision is your responsibility and TPA is not responsible for profit or losses made in the markets.
NASDAQ:METAShort
by TRADEPROAcademy
4
Beyond congestion, could move to monthly highs and beyondAfter some very assertive upward moves, Netflix was setting up to test all time highs and set a monthly high before the market sell-off. Fib levels were useful to some degree but daily, weekly, and monthly resistance may be more reliable indicators shown by the congestion zone highlighted in yellow. Entry above $518 may get caught in the congestion zone, whereas entry above $532 should be safe to reach the first fib target, hopefully moving beyond the monthly breakout level and to all time highs.
NASDAQ:NFLXLong
by SpinTrades
FANG: SUPERHERO HEAVEN OR HELL? This is the like the most powerful index on earth! From end of March 2020 to first week in Sept 2020, FANGS appreciated ~140%. If a trader had the right bottle, $1 could have become $34,000! This is just the mathematics. (Note carefully - this is an educational post, not a trade. I have not traded this nor do I make any claims. Trading in *derivatives in this index or any other, can multiply the value of $1. See disclaimer .) The FANG+ index is one to watch for everything else. It rules the world, of stock markets and influences several currencies (USD, NZD, AUD and JPY). This is where the big boys play! So - will the superheroes save the world? I don't know. There has been an important and sudden correction of this index. Stay tuned. Disclaimers : Leveraged trades and *derivatives are highly risky instruments. This is not advice or encouragement to trade securities. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, or miss opportunity, kindly sue yourself.
ICEUS:FNG1!Education
by Captain_Walker
The 'FA' Breaks away from the 'ANG' in FAANGTech is leading but the leadership in tech has been narrowing even further in the last month Apple and Facebook shares are outperforming - while the rest of the FAANG - Amazon, Netflix and Google are under performing. One possible trade is a to assume a return to the mean - ie the laggards pickup and/or the winners pullback The other takeaway is that the market leadership is getting very narrow - ie there is low breadth - which can often foretell a drop in the market (S&P 500 / Nasdaq)
Editors' picks
TVC:SPXShort
by jasperlawler
6
NDX- It is not broken until it is broken Much has been said about Big tech five's dominance on Nasdaq and S&P500 and how grossly valued NDX is. People often don't realize that big fives generate a good portion of their revenues oversea so technically their TAM is the entire world. Furthermore, internet, IT service and e-commerce industries are less impacted by Covid-19. Also, over the last 12 months, big fives saw double digit revenue increase while others fared much worse. The FOMO is merely reflecting the shift in investor preference from value stocks to growth stocks and Nasdaq is a place to be for chasing high-momentum thrill. As more and more investors pile on their money in tech company, the network effect kicks in. The key is to ride the trend and get in when the trend is still intact and get out when the trend is broken. Don’t worry about whether we are in the bubble or not or when the bubble will burst, because you don't own the crystal ball. It is harder to predict the top than bottom because market can remain irrational for a long time. Market always under-react to the surprise news initially, then overreact later. Perhaps, we are currently at the over-reaction stage. Nonetheless, If it ain’t broken, you keep riding on it. March crash reflected the anticipation of devastating second quarterly loss and the subsequent rally represented and reflected the positive sentiment of fast recovery in the third quarter. Let’s wait for Sept GDP number to confirm whether or not current sentiment is justified.
TVC:NDQLong
by Libratus