Bear Market ? Stock Market Crash ?
Good evening everyone , welcome to another weekly recap of the stock market ! Today we will discuss this past week's price action and determine whether or not a bear market is approaching. We will give some day trading stock picks in a later post + an insight of key levels to watch for the upcoming week and what to beware of in terms of a stock market crash.
As mentioned in last weeks stock watchlist, we indicated market weakness, and this week , the insight came true.
https://www.truetradellc.com/post/market-watchlist-2-22-2-29 (can read more here)
We gave some key levels in the 3815-3822 , 3884, 3910 and 3935. On 2/21 we opened just under the 3910 upside level (grey circle) and continued into that first 3846 zone (orange) , and shortly after we broke that and found ourselves at 3815 (green).
/ES - HOURLY 2/21 - 2/26
After the bigger buy off the lower zone at 3815 we found ourselves back near the highers, where the key 3935 upside level came into place (red circle), and this time we had a much larger, more forceful rejection back into the lows, and closing towards the lowes to end the week on 2/26.
Based on the continued sell from 2/25 and 2/26 , the bear market case has definitely began to grow. I wasn't able to give updated levels for the market throughout the week , but here they are for the upcoming week.
/ES - Hourly until 2/26
After the bounce (red circle) from 3805 (around 380.22 SPY) , we were able to recapture the 3857 area , and we started to hold , once we started to hold buyers pushed us back over the most recent resistance 3898 ( around 390 SPY) and then we made our went into the key 3935 (392.64 ish SPY) , and boom they started the mass selloff. We broke back under the 3900 and 3857 and began to hold the 3805 - 3857 range all 2/26, before making an end of day psh to close towards the lows on 2/26. As of now , we closed the day on /ES just over the level , and same with spy closing just over 380.22 . Depending on where we open later today , and how we react at that 380.22 / 3805 area , you want to keep you eyes out on these levels for downside and upside to follow:
UPSIDE: - 3857 (384.6 and 386.2 on SPY) - most recent resistance , as long as we are under here bears have control
- 3898 (390 ish SPY) - intermediate resistance, has not ran a test of the breakdown from 2/25 , could be visited on an up move
- 3935 (392.64 SPY) - Get back over here and holds , back to new highs we will go.
DOWNSIDE:
- 3805-3822 (380.22 and 381.55 SPY) - most current support area , if we can hold consolidate and slowly make a push higher, bulls may try to take control again, breaks that and the next levels can be used as targets for downside move.
- 3768 (Around 376.23)
- 3707 (Around 370)
- 3628.25-3640 ( Around 362.07 - 363.97 spy) - I don't expect this level to break this is the next big buy zone from over a month long consolidation 11/25/20 - 1/4/21
Now that we have discussed /ES , we can take a quick dive into /NQ (Tech) which has remained to be the weakest sector thus far , and then /YW (Dow) which has been the strongest out of the three.
/NQ itself is at a very big demand/support zone , where buyers should continue to hold.
/NQ -DAILY CHART UNTIL 2/26
Similar to /ES , tech had a very drastic sell off this week, looking much weaker than the S&P, but at the same tie , it closed as a very big demand zones, and did close at a better position than SPY on 2/26. In the following week i would expect tech to continue holding that 12647 zone around 310.25 on QQQ. If we do happen to get under 310 , the gates are open down into 304.04 and 298.29.
On the other hand we have the DOW , /YM which made new all time highs last week, but then closed the week at the lows.
/YM - DAILY CHART UNTIL 2/26
As of now /YM closed back under its most recent held support off 31076 (DIA Around 312.36) but it is just at its next support around 308 on $DIA. This is still the strongest sector in the market , so even with the pullback last week , we can expect a bounce to 31554 sometime next week if 30848 holds.
Then we have the volatility index, $VIX, which (despite /ES and /YM closing at low of day) failed to close at high of day.
$VIX - HOURLY UNTIL 2/26
Immediately with that in mind + indices being at relative support , we can expect another bounce sometime early next week, as long as we don't gap down to open on monday (i'll add a little preview in the market watchlist , will be posted later tonight when futures open.)
Now overall , yes the market had a pretty drastic selloff, as was warned about last week. But there isn't really any need to panic .... yet. As mentioned I'll have a preview in tonight's post about what's looking to happen tomorrow at open based on where futures are, but as always make sure to manage risk and reman smart. Don't start panic selling , but at the same time , it's always great to take some risk off long positions, or look to take some hedges with SPY, QQQ puts or some VIX shares/calls, as it will help cap your downside risk .
In short, we are still in a bull market, not a bear market, and pullbacks like this are pretty common in all long market environments. Just remain aware, take some hedges, reduce some risks, and keep an open mind ! The immediate trend is down , and it can get scary , so if you need any help or guidance don't hesitate to drop your questions down below ! I do expect a bit more pullback on /YM and /ES this upcoming week , but i think /NQ will likely level out , or not pull back as drastically until the other two catch up, but ill have a bit more clarification once futures open :)
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Hope you all have a wonderful rest of your weekend, and a great upcoming week :)
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What do you think will happen in the upcoming week ? A Bear market or a Bull market ? Drop it down below !!!