Following the Charts
Friday 12/1 – Major indexes show some upside but still face resistance at August highs. Watching how it plays out as we start the last month of trading. The leaders continue to lead and the laggards made a solid move on Friday. Still looking for the year-end rally. Manage the risk accordingly. Mega caps struggled the last few days. Crude dipped on production news.
QQQ – Cleared $366.14 resistance… Went to the downtrend line off the July highs and reversed. The headlines have weighed on the sector, but the year-end rally talk remains. Technically the chart shows support at $354.22 which held the last two trading days. Watching to see how this unfolds and what if any opportunities are presented. TQQQ entry $31.65. Stop $42.40 (adjusted).
10/24 – bounced at support… needs to follow through and back to $366 resistance. 10/25 – broke support… follow through on the downside and SQQQ comes into play. Thursday broke $347.50 support to add to the downside and benefit the SQQQ position. Opens the way to $325. 10/27 – Modest bounce to end the week as INTC & AMZN help on better than expected earnings. Remained below the $347.55 support. Monday bounced back above the $347.55 level and hit the exit point on SOXS trade…
11/1 bounced following the FOMC meeting. Cleared $347.55 and hit entry $345. Stop $366. TQQQ trade. Low-risk entry. 11/6 continues to follow through on the bottom reversal. Adjusted stop. 11/9 tested on treasury auction… watching how it unfolds. 11/24 moved above the August highs. Consolidating and testing support.
SPY – 11/1 Followed through with FOMC catalyst. SPXL entry hit. $420.66. Stop $443 (adjusted). Low-risk entry. Followed through on reversal. 11/6 continues to follow through on the upside move. ‘V’ bottom in play… needs to clear resistance at $437. Tested on the treasury auction… stops in place. Broke and gapped higher on the CPI data… adjusted stop again. 11/17 testing at the July highs. Consolidation near the highs making an upside move on Friday.
USO – Crude oil is struggling again. Double Top pattern on the chart… three days of selling after failing to eclipse the previous highs. Stops on position hit at $79.40 for nice gain… now watching the next opportunity to develop. $75 support in play. 10/27 – up and down the last six days… consolidation continues. Testing $75.05 key support. 11/2 – broke support but showing signs of wanting to bounce… look for upside trade UCO. Entry $32.25. Stop $31. Hit stop… continues to consolidate at support…
11/7 bottom falls out as speculation remains for weakness in demand based on economic data globally. Watching how it responds to this move looking forward… August lows next level of support… time for a relief bounce?
11/10 relief bounce arrives… needs to follow through and clear $73.26. Note bounce is on lower volume… watching. 11/14 cleared the entry point but didn’t hold into the close… patience. 11/16 breaks lower $66.23 support. 11/17 solid bounce… $69.57 entry. $70.75 stop. 11/24 Testing lower on the inventory data… OPEC delayed meetings on production cuts. Downtrend in play and looking for some clarity in the action near term. 11/27 bounced? Needs to follow through. 12/1 dropped on OPEC voluntary production cuts.
Natural Gas (UNG) – Oversold on the chart. Expectations are for a colder winter based on the Farmers Almanac, but that will have to be validated based on the current weather patterns. Technically the chart broke lower from the trading range and bounced 6% on Monday. We need to hold the move and validate the break-up. 11/14 tested but closed near the lows of the day… watching… tried but had no conviction… KOLD in play. 11/16 tested lower again… looking for a bounce. Back to the June lows… 11/27 broke $5.87 support? 11/28 confirmed the move lower. Adding to the downside…
Technical Summary
Overall markets remain in a bottom reversal bounce with four weeks of upside in the major indexes… one week of consolidation and we are managing the risk as the markets become divided between the haves and the have-nots. Taking what is offered without overthinking what we see… too easy to get caught up in the noise of the markets and news. The current bounce off the lows remains just that… a bounce… market has plenty of work to do to validate a reversal and longer-term trend. We are seeing some consolidation in patterns setting up for a continuation of the upside move or the second phase.
* All charts are courtesy of TC2000