Good Evening,
From a momentum perspective, last weeks trading was just profit taking and panic selling induced by computer algorithms so they can position themselves for the next leg of upside that will surely come. The economy is still in recovery mode. Granted, pullbacks are never fun, but they’re quite common. And typically, quite healthy.
If you click on the charts they will become larger.
Above is the Monthly S&P500 index chart.
Above is S&P500 daily chart:
The resonance from both DMI & MTM was good signal. Also, both DMI & MTM are still positive now.
Above is S&P500 60 minutes chart:
Both KD and MACD are looking for golden cross and continue up.
It is possible to build W-shape bottom during consolidation.
Above is the Monthly NASDAQ Index chart.
Above is the weekly NASDAQ Index chart.
Above is the Daily Nasdaq Index chart.
Above is the hourly Nasdaq Index Chart
Generally, we have a drop in September. However, it has low chance of being a big drop this year because we already had big downfall in March.
Next week, the indices should have a high probability of moving higher because this profit taking was mainly in the Tech sector (NASDAQ gained too much) and didn’t effect traditional industries by causing them to drop much such as the Russell 2000. As long as big techs like AAPL and MSFT stop dropping and then reverse for another leg up, the NASDAQ index will not fall easily.
There is the chance the selling isn’t over. However, after similar moves in June the indices eventually continued to rally and I believe they will do so this time as well!!
Next week, the indices should have a high probability of moving higher because this profit taking was mainly in the Tech sector (NASDAQ gained too much) and didn’t effect traditional industries by causing them to drop much such as the Russell 2000. As long as big techs like AAPL and MSFT stop dropping and then reverse for another leg up, the NASDAQ index will not fall easily.
There is the chance the selling isn’t over. However, after similar moves in June the indices eventually continued to rally and I believe they will do so this time as well!!
May God Bless,
Wayne
