One Down, One To Go
Market Update August 24, 2023
NVDA wins again! Earnings and guidance beat expectations and the stock soared after hours before profit-taking sent it lower mid-day.
The rest of the market moved lower as well and a ‘risk-off’ mood spread throughout the day. That is likely due to apprehension about what Jerome Powell may say tomorrow in Jackson Hole. Last year his comments sent the SP 500 lower by more than 3%.
Is he hawkish, stern, and cautionary? Or does he lighten his tone on inflation a bit and suggest that we’re closer to the end of the rate hike cycle?
He is scheduled to speak at 10:05 a.m. Eastern tomorrow. So we will know soon enough.
On to the bigger picture.
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SPY put in a nasty red candle after opening at the 50-day MA. It hasn’t yet definitively signaled that this bounce is over. But there is a potential bear flag forming. If that pattern is confirmed then a move down to the 100-day MA, and lower could be likely.
QQQ price action and chart are essentially the same as SPY with the exception that it opened above the 21 and 50-day MAs. A potential bear flag pattern is evident here as well, which if confirmed, would likely send prices much lower. There is a potential support zone at $354-357.
IWM is trying very hard to remain above the 100 and 200-day MAs. Once again, a bear flag pattern is forming. A break lower would have a measured move price objective near $170.
DIA is back in the wide, yearly range, below recent lows, and looking more and more like the mid-July to mid-August rally was a failed breakout. It closed just beneath the 100-day MA and has a bear flag in play. Caution.
TLT Bonds were able to bounce from weekly support and, while lower today, appear to be holding up okay. Next overhead is the 21-day MA at $95.86 and a pivot level near $97.
DXY The Dollar continues to move higher after spending a few days consolidating above the trendline and 200-day MA. Continued headwind for stocks.
The Closing Bell
One more bonus chart.
One of the shorter-term indicators mentioned here is the 5-day MA.
After a failed attempt on Tuesday SPY moved higher again on Wednesday and above the 5-day MA. A potential indicator that the turn could persist.
Now today’s action has both SPY and QQQ back below that level. Tricky environment.
Near-term caution is still warranted.
30m chart. 5-day MA is the blue line
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***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.
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August 24, 2023, 4:00 PM
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Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike