SPY, QQQ, DIA, & US2000 [3D Candles] - Looking Eerily Similar
The major indices as represented by respective ETFs have over the past few weeks become more and more similar in price structure on their daily and weekly charts, among other timeframes. The top left chart is
SPY
, the top-right chart is the
QQQ
, the bottom-left chart is the
DIA
, and the bottom-right chart is the
US2000
(technically a CFD as opposed to an ETF).
For purposes of balancing sufficient detail of the most recent price action against a wide enough view of the larger uptrend context since just after the March 2020 panic low, all four price charts use 3-day candles.
While all four of these tickers -- and therefore their underlying indices -- have experienced a rather pronounced and sustained weakness giving way to a not insignificant period of decline basically since the start of 2022 (with obvious acceleration to the downside more recently, save for the rather modest relief rally experienced several weeks ago), a brief "breather" in the decline for the market to digest the move and chop around for a bit should not be unexpected. That being said, the overall current price structure, sentiment, trend, and momentum -- all from a more traditional technical analysis perspective -- is unmistakable. All four instruments/tickers exhibited well-behaved price action respecting a very clean and orderly up-trend support line since Spring/Summer 2020 -- almost two years obeying a very well-defined clean uptrend support line. That is, until recently. Not only have all four charts broken below the uptrend support line on both daily and weekly candle charts, but price also closed below the broken uptrend line on both a daily and weekly basis. When presumably the retail crowd stepped in at that point to "buy the dip", all four price charts caught a temporary bid rallying back up to near the underside of the broken uptrend line previous-support-now-turned-resistance, thus confirming the trend reversal,
It is recognized that geopolitical tensions and events are almost certainly playing a role in exacerbating the recent market moves over the past few weeks, it should be noted that rarely if ever can various happenings in the financial markets be attributed to one thing or cause. There are almost always, nearly without exception, multiple causalities contributing to a given situation. For example, in the present scenario, there were reliable indications that the GDP in the USA was beginning to slow in rate of change terms as early as later 4Q-2021, while inflation was at multi-decade highs thus exerting political pressure on the Federal Reserve to reverse course and take a hawkish stance as to monetary policy by at eh very least "jawboning" the market into believing that very aggressive rate hikes to the tune of 50 bps up to even 100 bps had a very good likelihood of happening by March 2022, coupled with Quantitative Tightening (i.e., taking back some or a lot of all that crazy large amount of "liquidity"/money he's been injecting into the system over the last two years which has juiced the financial markets to such high levels). But just as flooding financial system and it's cronies juiced the stock market up so far so fast so aggressively cause all that new money had to find someplace to go, it doesn't take a rocket scientist to figure out that happens when the opposite occurs (liquidity/excess-money-reserves are drained from the banking and financial system, even if done in a somewhat cautious, deliberate, and slow manner). And to add "insult to injury", if Jay Powell and the Fed do indeed tighten monetary policy into a decelerating macroeconomic/GDP backdrop, this would be a double whammy. Perhaps even a triple whammy, since we additional aggravating and complicating macroeconomic factors such as the PCE (Personal Consumption Expenditure) which is a specialized measure of inflation that the Fed uses and pays close attention to, and which is by the Fed's own admission alarmingly high and furthermore has a history of remaining stubbornly high once it gets up high in it's particular measure of inflation -- with the Fed admitting that they've had very little if any historical success in bringing that PCE number down once it gets going and feeds upon itself.
So, short story long: you may or may not see a relief rally in the markets over the next few days/weeks (or not), but it would be wise to keep in mind that the present market "turmoil" was set in motion before all the Russia talk the past few weeks. So keep your wits about you and maintain a critical mind.
DISCLAIMER (FOR THE 'G-MEN' GOONS OUT THERE):
The above is presented exclusively for informational, educational, and/or entertainment purposes only. Nothing herein is intended to be, nor should be construed as legal, financial, tax, or any other professional advice of any kind whatsoever. Nor are any statements contained herein intended to be an invitation to form any type of professional advisory relationship including but not limited to attorney-client relationship, financial-advisor-client relationship, tax-advisor-client relationship, or any other professional relationship whatsoever may be regulation or prohibited by law. The above statements are the personal opinions of the author, made with explicit disclaimer of all warranties, whether explicit or implied, as to the accuracy of said statements; and as such the information presented herein should not be relied upon in any capacity. Financial/Capital markets are inherently risky and accordingly carry a significant risk of loss, especially for the inexperienced as well as small retail investor. Before considering any financial decision, especially before considering participating in the capital markets by putting personal capital at-risk, prudence dictates consulting with a qualified professional financial advisor, a qualified tax or other specialist attorney licensed in your jurisdiction. Never risk more money in the financial markets than you are comfortable and 100% willing to lose plus not suffer material hardship to your overall financial wellbeing if you lose it all.
SPY
, the top-right chart is the
QQQ
, the bottom-left chart is the
DIA
, and the bottom-right chart is the
US2000
(technically a CFD as opposed to an ETF). For purposes of balancing sufficient detail of the most recent price action against a wide enough view of the larger uptrend context since just after the March 2020 panic low, all four price charts use 3-day candles.
While all four of these tickers -- and therefore their underlying indices -- have experienced a rather pronounced and sustained weakness giving way to a not insignificant period of decline basically since the start of 2022 (with obvious acceleration to the downside more recently, save for the rather modest relief rally experienced several weeks ago), a brief "breather" in the decline for the market to digest the move and chop around for a bit should not be unexpected. That being said, the overall current price structure, sentiment, trend, and momentum -- all from a more traditional technical analysis perspective -- is unmistakable. All four instruments/tickers exhibited well-behaved price action respecting a very clean and orderly up-trend support line since Spring/Summer 2020 -- almost two years obeying a very well-defined clean uptrend support line. That is, until recently. Not only have all four charts broken below the uptrend support line on both daily and weekly candle charts, but price also closed below the broken uptrend line on both a daily and weekly basis. When presumably the retail crowd stepped in at that point to "buy the dip", all four price charts caught a temporary bid rallying back up to near the underside of the broken uptrend line previous-support-now-turned-resistance, thus confirming the trend reversal,
It is recognized that geopolitical tensions and events are almost certainly playing a role in exacerbating the recent market moves over the past few weeks, it should be noted that rarely if ever can various happenings in the financial markets be attributed to one thing or cause. There are almost always, nearly without exception, multiple causalities contributing to a given situation. For example, in the present scenario, there were reliable indications that the GDP in the USA was beginning to slow in rate of change terms as early as later 4Q-2021, while inflation was at multi-decade highs thus exerting political pressure on the Federal Reserve to reverse course and take a hawkish stance as to monetary policy by at eh very least "jawboning" the market into believing that very aggressive rate hikes to the tune of 50 bps up to even 100 bps had a very good likelihood of happening by March 2022, coupled with Quantitative Tightening (i.e., taking back some or a lot of all that crazy large amount of "liquidity"/money he's been injecting into the system over the last two years which has juiced the financial markets to such high levels). But just as flooding financial system and it's cronies juiced the stock market up so far so fast so aggressively cause all that new money had to find someplace to go, it doesn't take a rocket scientist to figure out that happens when the opposite occurs (liquidity/excess-money-reserves are drained from the banking and financial system, even if done in a somewhat cautious, deliberate, and slow manner). And to add "insult to injury", if Jay Powell and the Fed do indeed tighten monetary policy into a decelerating macroeconomic/GDP backdrop, this would be a double whammy. Perhaps even a triple whammy, since we additional aggravating and complicating macroeconomic factors such as the PCE (Personal Consumption Expenditure) which is a specialized measure of inflation that the Fed uses and pays close attention to, and which is by the Fed's own admission alarmingly high and furthermore has a history of remaining stubbornly high once it gets up high in it's particular measure of inflation -- with the Fed admitting that they've had very little if any historical success in bringing that PCE number down once it gets going and feeds upon itself.
So, short story long: you may or may not see a relief rally in the markets over the next few days/weeks (or not), but it would be wise to keep in mind that the present market "turmoil" was set in motion before all the Russia talk the past few weeks. So keep your wits about you and maintain a critical mind.
DISCLAIMER (FOR THE 'G-MEN' GOONS OUT THERE):
The above is presented exclusively for informational, educational, and/or entertainment purposes only. Nothing herein is intended to be, nor should be construed as legal, financial, tax, or any other professional advice of any kind whatsoever. Nor are any statements contained herein intended to be an invitation to form any type of professional advisory relationship including but not limited to attorney-client relationship, financial-advisor-client relationship, tax-advisor-client relationship, or any other professional relationship whatsoever may be regulation or prohibited by law. The above statements are the personal opinions of the author, made with explicit disclaimer of all warranties, whether explicit or implied, as to the accuracy of said statements; and as such the information presented herein should not be relied upon in any capacity. Financial/Capital markets are inherently risky and accordingly carry a significant risk of loss, especially for the inexperienced as well as small retail investor. Before considering any financial decision, especially before considering participating in the capital markets by putting personal capital at-risk, prudence dictates consulting with a qualified professional financial advisor, a qualified tax or other specialist attorney licensed in your jurisdiction. Never risk more money in the financial markets than you are comfortable and 100% willing to lose plus not suffer material hardship to your overall financial wellbeing if you lose it all.