Bullish Consolidation Continues
Market Update November 28, 2023
The Markets
The high-level consolidation continues.
The SP 500 has gone virtually nowhere for six days. That’s not a bad thing. Time correction is generally more bullish than price correction. Of course, price correction could still come. But the longer prices stay at the upper levels, the better.
The week has been fairly quiet so far without a catalyst to send prices moving in either direction. SPY did try to break higher in early trading today but was met with selling, indicated by the long upper shadow on today’s candle.
Had the buying persisted and driven prices higher into the close, the candle would be large and green (bullish), similar to the one last Monday.
Given the lack of new action, here is a refresher on candlestick charting.
Candlestick Charting Basics
Candlestick charts can be used in any time frame - from 1 minute to Monthly, and beyond.
Each candle consists of four main components.
Open
High
Low
Close
When a candle closes the day higher than the open, a green (or white) candle is formed. When the daily closing price is lower than the opening price, the candle is red (or black).
The opening and closing prices mark the ‘real body’.
Moves beyond the open and close are represented by the ‘shadow’.
Knowing this structure allows the viewer to quickly decipher the daily action.
Is the candle green or red?
Is the real body large or small?
Are shadows present? If so, are they long or short?
This information gives an early indication of whether buyers or sellers had control, whether the daily range is expanding or contracting, and whether reversal, continuation, or indecision is more likely.
Today’s Price Action
Today’s SPY candle has a small ‘real body’ and a long ‘upper shadow’ indicating that prices initially moved much higher after the opening but couldn’t stay there for the close.
The resulting candle looks like this-
Here’s what that looks like on an intraday chart.
2-minute chart
Buying came in sending prices notably higher, but was ultimately overtaken by selling. The intraday reversal results in a potential daily reversal pattern on the larger timeframe.
Now, we can watch subsequent candles to see if the pattern is confirmed or negated.
More on patterns in future articles.
Let’s go to today’s charts.
The Charts
SPY is still above the September pivot high and consolidating above the 8-day MA, which has caught up to the price. RSI is slightly lower but still overbought.
QQQ is consolidating above the July pivot high and the 8-day MA. RSI is tracking along just below 70. Volume is lighter than average.
IWM closed a nickel below its 8-day MA but is staying above the gap area from June. RSI is not overbought, and further consolidation in front of the 200-day MA is bullish so far.
DIA has been a leader and remains the sole major index trading well above the 8-day MA.
TNX 10-year Treasury Yields traded through a pivot high from August. That’s positive for stocks. However, there is another, potentially more significant pivot high from September 2022 at 4.33%. This move is nice. But a move further below 4.33 will carry more weight.
DXY The Dollar has continued lower from the bear flag breakdown (mentioned HERE) and nearly reached the measured move price objective. Look for this to stabilize near $102.30-$102.40. Then reassess.
The Closing Bell
Continued bullish consolidation, or time correction, with the caveat that prices could still break either way (always the case). The 21-day MAs are still miles away.
Be patient.
Don’t get in a hurry.
Wait for clues about the next directional move.
Or maybe hunt for potential catch-up trades, as the leaders and major indexes continue to rest.
Hint: there may have been a couple possibilities mentioned today.
And let me know in the comments, on X, or by replying to email (if that is where you are reading this) if you like the Candlestick Charting Basics.
If the feedback is good, I will bring follow-up articles soon.
The Disclosures
***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.
POSITION DISCLOSURE
November 28, 2023, 4:00 PM
Long: AMZN, GOOGL, IWM1215C180, QQQ, TGTX, XBI1215C75
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike
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