Risk Revived
Resistance Shows Up For $SPY & $QQQ
The Markets
Stocks are back on their heels today as risk reappears.
At the close of last week, we had some criteria to watch for added bullishness or renewed defensiveness.
The action this week has checked one box, new highs (on the short-term ‘roadmap’ chart). But it hasn’t come without a catch.
The move did take prices above the AVWAPs from the pivot highs made in early March. But they quickly found resistance at the AVWAPs from the all-time highs made a couple of weeks prior. Furthermore, prices on 3 of 4 indexes are now back below the 5-day MA.
Here are the daily timeframe charts for a bigger view.
The Charts
SPY had a significant test near $575, as my friends Steve Strazza and Michael Nauss pointed out, not only in the AVWAP from the highs, but also with a number of other issues. (Both are very active on X.com and their own webpages, which are linked below. Definitely add them to your regular reading lists.)
January pivot low
The election gap
The 200-day moving average
AVWAP from the August 5 pivot low
Two 38.2% Fibonacci retracements. One on the Aug - Dec. rise, and the other on the Feb. - March sell-off.
Steve Strazza on StockMarketTV.com
Michael Nauss, CMT at StatsEdgeTrading.com and Substack
QQQ had a very similar roadblock near $495.
The election gap
The 200-day moving average
AVWAP from the August 5 pivot low
Two 38.2% Fibonacci retracements. One on the Aug - Dec. rise, and the other on the Feb. - March sell-off.
Yesterday’s note on X pointed out:
The Trade
Watching for continued pressure -
The size of today’s move is significant, taking us back into the gap between Friday’s close and Monday’s open. Choppiness is one thing. Selling that gives back more than the recent gains in quick fashion is another.
Here’s what to look for next:
Can we maintain the series of higher highs and higher lows on the roadmap (short time-frame)? Refer to the first chart above. Can prices stay above the recent lows, marked with U-shaped lines on the chart?
Can prices hold above the rising 8-day moving averages, which they tested today? Those are the yellow lines on the daily charts.
The last line of defense: can we hold above the AVWAPs from recent lows? Orange lines rising from the recent pivot lows on daily charts.
If yes to all three, then we may have seen the bottom for this move.
If no to all three, we almost certainly would go on to test the recent lows.
We can not know for sure until after the fact. But, we do have signs to look for along the way.
PCE on Friday morning will have an effect.
Scheduling note: Due to some travel and planned time away from the markets, this will be the only Market Update article this week. There will be a follow-up next Wednesday. And Saturday’s regularly scheduled Weekly Charts will be disrupted once again.
See you soon.
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