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PUBLIC: Channel barely holding, downtrend trying to form?

I hope everyone has enjoyed the Fourth of July holiday and had some time for R&R with friends and family.  If you are a subscriber, the monthly update went out right on time following the close of the month.

Looking at a daily chart of the S&P500/SPY, price hasn’t dropped below the lower channel line that started in the spring of 2017 and price bounced off the 50-day moving average on Friday and today.  However…short term, price has formed lower highs and lower lows using the 2400 level as a base from late May and now June and July.  Round numbers tend to act that way (creating support or resistance).  Until 2400 is definitively broken through and closes on a daily basis, there really isn’t anything too alarming on the S&P500/SPY at this time.

The NASDAQ/QQQ is slightly different in that the price peaked June 9th, we had a pretty decent “mini-crash” when all the megacap (think FAAMG stocks) tech stocks got sold off, a bounce, and then a lower low last week.  That meets the definition of a lower high and a lower low creating the start of a downtrend.  Price needs to rally back at least above the late June QQQ peak to bring any doubt to this new trend.  Price is hovering just above and below the 50-day moving average as well.  Keep an eye on the NASDAQ/QQQ (and FAAMG stocks) for an idea of what will happen to the broader market of the DOW and S&P500.  The larger market has been heavily propped up by the FAAMG stocks, and if they start to falter, the entire market is likely to have issues.

  1. Dr. J
    Dr. J July 17, 2017

    The bottom of the channel held and buyers stepped back in en masse to push prices back up near the top of the channel. New all time highs on the S&P500 kinda kills the “lower high, lower lows” definition of a downtrend, so back to an upward bias again until another downtrend can start to form.

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