Get Your Puts In, This Rally Is Weak.
Short and concise as all of my charts are. I believe in the methodology of coming up with a fundamental approach to reading the charts, and simply test these beliefs with TA to either confirm or reject the fundamentals. This late-week rally leading into the weekend has A LOT of stipulations involved which is why it is very difficult too identify a clear and concise move at the moment. Democrats in the US are working hard to push an additional stimulus bill to pass which has in the recent pass, caused markets to rise. Republicans are still not set and have not voted on this new bill. This is an extremely important note to remember here. Stimulus bills are good for corporations, which in turn yields positive returns in the overall market as sentiment rises. THIS IS NOT A LONG TERM ECONOMIC SOLUTION but it's apparent those in leadership roles are prioritizing keeping our markets propped up and I can easily foresee this new stimulus bill passing once the Republican party can add a few stipulations to the bill.
Putting the stimulus aside, short term charting is showing a very clear double top. In my previous chart, this was identified and successfully shorted down to the 50 fib retracement level. You can see my buy zone was set between $274-278 and I gotta say... It was perfect. That zone was a major support area and a subsequent bull rally followed. This was expected too! Not every bear rally is 2,000 days straight of red, we MUST have green days to leg down further. After-all, if there are no buyers, who is there to pick up your shares/options once you exit?
We're seeing:
All things are leading and pointing to another leg down. Buying volume is very poor in this rally, thus showing a lack of positive sentiment in the current price point we're hanging around. Looking for what to watch? Volume will dictate which way we begin moving. I also implore you to take a close look at resistance and support zones. We did see a solid bounce from the 50 Fib level but I simply don't think we have enough upward momentum to re-test 61.8 again. If a leg down takes place next week or over the weekend, I can see us re-testing the 50 Fib level and that level failing, driving us down to new lows once again.
Level of risk: Moderate to High
Be very careful with staying up to date on the news and the impending stimulus bill. This will impact price action and will likely come after hours. If this bill stalls or doesn't get passed, that alone will be a catalyst for our next leg down.
Just be very careful during these low volume days and make sure to watch the Greeks if you decide to play options. I suspect if the stimulus passes, Monday will be quite green but watch that volume!
Putting the stimulus aside, short term charting is showing a very clear double top. In my previous chart, this was identified and successfully shorted down to the 50 fib retracement level. You can see my buy zone was set between $274-278 and I gotta say... It was perfect. That zone was a major support area and a subsequent bull rally followed. This was expected too! Not every bear rally is 2,000 days straight of red, we MUST have green days to leg down further. After-all, if there are no buyers, who is there to pick up your shares/options once you exit?
We're seeing:
- Lower highs
- Lower lows
- RSI is also showing exhaustion
- Major resistance is being hit currently
All things are leading and pointing to another leg down. Buying volume is very poor in this rally, thus showing a lack of positive sentiment in the current price point we're hanging around. Looking for what to watch? Volume will dictate which way we begin moving. I also implore you to take a close look at resistance and support zones. We did see a solid bounce from the 50 Fib level but I simply don't think we have enough upward momentum to re-test 61.8 again. If a leg down takes place next week or over the weekend, I can see us re-testing the 50 Fib level and that level failing, driving us down to new lows once again.
Level of risk: Moderate to High
Be very careful with staying up to date on the news and the impending stimulus bill. This will impact price action and will likely come after hours. If this bill stalls or doesn't get passed, that alone will be a catalyst for our next leg down.
Just be very careful during these low volume days and make sure to watch the Greeks if you decide to play options. I suspect if the stimulus passes, Monday will be quite green but watch that volume!
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