It’s good to get out, and good to be back
I’m happy to be writing to you all again after being away last week.
You will recall I spent the week in New York City for some meetings at the T3 Global Headquarters, making some new friends, and attending the CMT Association’s 50th Anniversary Symposium.
The event was perfect! And I have never been more proud to be a member of an organization.
It was an honor to be there meeting and spending time with so many legends of technical analysis; Ralph Acampora, Bob Farrell, John, Bollinger, Tom DeMark, Larry Williams, Louise Yamada, Jerry, Parker, and on and on.
The energy was contagious. The market thoughts and ideas shared over that three days were truly world-class, coming from the best thinkers and analysts in the business. The attendees’ ages ranged from high school and college students to at least 90 years old (Bob Farrell is as brilliant as ever). And guests traveled from all over the United States and Canada, with many coming from countries much further away including; Argentina, Australia, India, Japan, Poland, Venezuela, and many more.
But let’s get back to Bob Farrell. Mr. Farrell started as a technical analyst at Merrill Lynch in 1957. He’s seen a lot of different markets and is renowned for many pearls of wisdom. One of those pearls is Bob Farrell’s 10 Rules. A timeless collection of market observations that have been witnessed countless times over his decades of analysis.
Rule no. 8 says that Bear markets have three stages — sharp down, reflexive rebound, and a drawn-out fundamental downtrend. This sequence was evident in 2000-03, 2007-09, and even 2014-16 even though that decline never reached the supposed bear market defining decline of -20%.
Today’s market has the first two components but after the drop and the rebound, it has been an upward/sideways movement. It has even been called an intermediate-term uptrend.
So far though, it is still below the ‘rebound’ high of roughly 4325 on SPX. And that is what’s been confounding analysts, traders, and investment managers for almost a year. The market won’t show its hand. It had every reason to crash. And parts of it have (banking). But other parts are up 150% or more.
One of these days there WILL be a resolution. Until then, we are left to navigate the land of confusion — a sideways, choppy market.
The Markets
Last week it appeared that we may see some resolution in the form of checkmarks on this list.
SP futures hit a high of 4206. QQQ clocked in a close of $322.16. DIA was within just a few points of $346. And ACWX was barely more than a dime away from $50. Even the small-cap IWM was making progress and we could almost see the nearing days of a perfect ‘5 out of 5’ score on the checklist.
But, as you know, it didn’t last. Sellers stepped in again. Presumably to lighten risk ahead of today’s Fed meeting. Nothing is technically broken yet. But all eyes are still on interest rates.
The Charts
SPY is lower for the third consecutive day and now below the 8/21-day MAs. There is potential support at 406-407, followed by 402-403 where the 50-day and the March low AVWAP reside.
QQQ NASDAQ 100 stocks are also lower but still above the 21-day MA and the ATH AVWAP. Medium-term momentum lives on for now and there is another layer of potential support just underneath at 314-315.
IWM Small caps were strong and leading early in the day and even moved above the 8 and 21-day MAs for a moment. But Fed-induced selling took them back down to close near the lows of the day.
DIA Dow Jones 30 stocks have a short-term ‘rounding top’ look about them as prices move back towards a pivot low, the ATH AVWAP, and the 50-day MA.
ACWX - ‘The Rest of the World’ index is caught in the AVWAP pinch - March ‘20 low and ATH, and also below the 8/21-day MAs. There should be support lower around 48.30-48.50. After that, there is room down to the 200-day at about $46.
The Closing Bell
Thanks to all of you for being here. And thanks to all the friends I got to meet last week. You’re a fantastic bunch and I’m proud to know you.
I shared a fun video of my NYC trip on the social channels. If you haven’t seen it yet you can find it here.
Enjoy.
See you all again Friday for the Weekend Market Review.
***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
May 3, 2023, 4:00 PM
Long: SHOP0512C54
Short: DOCU
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike