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PUBLIC: The market just goes UP, nothing to do but watch – Dr. J's Market Thoughts Press "Enter" to skip to content

PUBLIC: The market just goes UP, nothing to do but watch

Of course, a headline like the one above usually marks the top of a run, right?  I suppose it could if this analysis were widespread like the cover of Barron’s or Fortune magazine, but I’m just an individual blogger with a small footprint in the financial world.  And I like it that way.  Small is nimble.  Giant is cumbersome.

The SPY daily chart below has a white channel on it that isn’t particularly pretty in that it has some irregular touches and is more of a “price stays inside” than a true price channel that has bounces multiple times on each side and is well defined (the lower trendline is created by creating a parallel line to the top and finding a few price points that touch).  But from the beginning of 2016, I think it is a fair statement that price has remained nicely in this upward sloping channel and until it breaks out of this white channel, there isn’t any reason to believe something different is happening.

Note the fuscia/pink channel lines on the right side of the chart.  Those start in late August and have contained an upsloping price movement for the last few weeks.  I’ve taken a close-up of that area with the white channel line still present for context as well as the well-known 50-day (blue dotted) and 200-day (salmon dotted coincident with the lower white channel line) moving averages.  Remember, nothing bad happens when price is above a rising 50-day moving average.  Here is that close up:

And still a closer look at the current channel since late August, still a daily chart:

A couple of technical notes on this chart…Note the RSI 14 line has been annotated with peak figures listing 93.77, 79.16, 84.93, and 86.71 plus a green line connecting the lower boundary of this rising metric.  Until RSI breaks the green line near the 70 level, there is nothing to consider about any downside in the market.  Granted, eventually the green line will have pushed all the way up to 100 and make it impossible for an RSI line (limited to 100 as a maximum value) to not cross it, but that is weeks away (November OPEX to give you a time frame to watch out for).

Additionally, there is a green arrow near SPY $262 where the larger white channel would receive another tag of the top trendline.  There is also a red arrow where the lower trendline of the pink channel would be challenged and that is near $252.50 early in the week and rising.  By the end of the week, it is at $253.70, so it is moving up just a bit more than a buck a week.  The blue dotted line (50-day moving average is at $248.59 to start the week and the 200-day moving average is down near $240.  Should the pink channel line be breached, both those lines should be provide support, especially the $240 ara given the large white channel built since 2016.

Given the technical outlook at this point, it is going to take an outside event to tip this market to the downside in my opinion.

Thank you for supporting Dentistmarketalert.com.  I wish there were more insights I can share, but the reality is this market just won’t go down so enjoy the smooth sailing to the upside and your brokerage account while it lasts.  I’m quite sure we are going to find some turbulent markets again at some point.