Stock Market Analysis - 4/20/2020 - $SPY $QQQ $IWM $VIX
Before starting off this stock market analysis, I highly recommend listening a new podcast by Tom Canfield (@Canny4) and Joe Fahmy (@jfahmy) called The Market Rant. Very raw and informative. You'll definitely find some value in this podcast.
www.youtube.com/watch?v=1Sx6DF75...
Since the last stock market analysis, I had thought markets were starting to rollover and the uptrend was waning. However, on Thursday after the close, we got news about the initial success in Gilead's remdesivir medication for treating COVID-19 and Trump's announcement about opening America. This caused markets to gap up on Friday above the prior highs and continued this uptrend. Markets are looking strong and I am sure there are a lot of people frustrated at this price action. If you are one of those people who think markets have gone up too far too fast, take a step back.
As a Trader, is it not your job to predict what will happen in the future. That is called gambling. Your job is to follow price action to determine what is most likely to happen in the future. Thinking that markets have to go lower because this virus is going to get worst and the economy is going to collapse due to horrid unemployment numbers is nonsense. It sounds terrible, however the reality is that markets continue to uptrend despite these prospects. Sure, I personally think that this bounce is very overextended, however I continue to stay long my stocks because I am following the price action rather than my personal views. My tip for today is to stay objective and remember that anything can happen in the markets.
First, looking at the SPY, we continue to trend higher with a close on Friday above the 50DMA. I expect this area to be a strong level of resistance therefore, unless we gap up on Monday, I could foresee some sideways chop to occur here. If we continue to trend higher, the next resistance will be 300 at the 200DMA. There is also a rising wedge forming which is a bearish pattern.
QQQ continues to be the strongest of the bunch as it has successfully reclaimed all major moving averages. The rise in QQQ has been quite steep and the rising wedge pattern forming is tightening quite a bit. QQQ is currently hitting resistance therefore price could find some trouble here.
IWM has not participated much in this current uptrend. Although we had an impressive gap up on Friday, IWM is still below the prior highs from last week. There is resistance at 125 therefore, like all the other indexes, IWM could find trouble here.
VIX continues to downtrend in a pretty obvious downward channel.
www.youtube.com/watch?v=1Sx6DF75...
Since the last stock market analysis, I had thought markets were starting to rollover and the uptrend was waning. However, on Thursday after the close, we got news about the initial success in Gilead's remdesivir medication for treating COVID-19 and Trump's announcement about opening America. This caused markets to gap up on Friday above the prior highs and continued this uptrend. Markets are looking strong and I am sure there are a lot of people frustrated at this price action. If you are one of those people who think markets have gone up too far too fast, take a step back.
As a Trader, is it not your job to predict what will happen in the future. That is called gambling. Your job is to follow price action to determine what is most likely to happen in the future. Thinking that markets have to go lower because this virus is going to get worst and the economy is going to collapse due to horrid unemployment numbers is nonsense. It sounds terrible, however the reality is that markets continue to uptrend despite these prospects. Sure, I personally think that this bounce is very overextended, however I continue to stay long my stocks because I am following the price action rather than my personal views. My tip for today is to stay objective and remember that anything can happen in the markets.
First, looking at the SPY, we continue to trend higher with a close on Friday above the 50DMA. I expect this area to be a strong level of resistance therefore, unless we gap up on Monday, I could foresee some sideways chop to occur here. If we continue to trend higher, the next resistance will be 300 at the 200DMA. There is also a rising wedge forming which is a bearish pattern.
QQQ continues to be the strongest of the bunch as it has successfully reclaimed all major moving averages. The rise in QQQ has been quite steep and the rising wedge pattern forming is tightening quite a bit. QQQ is currently hitting resistance therefore price could find some trouble here.
IWM has not participated much in this current uptrend. Although we had an impressive gap up on Friday, IWM is still below the prior highs from last week. There is resistance at 125 therefore, like all the other indexes, IWM could find trouble here.
VIX continues to downtrend in a pretty obvious downward channel.
Comment:
Overall, there are still clues that the markets could find some trouble in the near term. I will continue holding long, however I plan on taking profits quickly if I start to see this uptrend start to wane again. Be careful with putting on new long trades here. Ideally I would like to see a intermediate term pullback to the 20DMA before another leg up.