7/6/23
Good evening,
SPY was down 0.97%. and it looks like we are getting that scenario of coming down to fill that and we’re just above the rising 20 daily moving average and the support at $436. And because we are still in a bull trend, we cannot rule out the possibility that we are going to bounce from here and still break out and head to a higher high. We still have the Bull trend until price action proves otherwise. The trend is your friend until the end, and this is still a bull trend until it’s not. So, if we break down below support, then we can say we’re likely coming down towards the breakout at $430, but that’s going to require the breakdown below $436, which is that rising 20 day moving average. If we break below $436, we’ll likely see higher volume selling down towards $430. And if we break $430, we’ll likely get a deeper correction to fill the gap at $423 and test the breakout right around $400. However, for this scenario to play out it’s against the trend, you need price action to confirm it. And right now, if we start to bounce tomorrow, we do have a gap to fill to the upside just below $442, which is also resistance. So, in the short term, it’s possible we do bounce and close that gap and then still put in a lower high and then still come down and test that break out at $430. So there’s a lot of scenarios that can play out, but the price action levels do not change. That is going to be $442 and above $442, we’re looking for $448 and below $436 we’re looking for $430. You can trade the range. If we don’t break out and we just ping pong between $436 and $442. There is a possibility that we just build out some type of bull flag and consolidate and go nowhere but sideways and have a correction through time.
The NASDAQ 100 Triple Qs, we were down .76% today and we also closed the gap to the downside and we also still have a gap to the upside. So just like SPY, it’s possible the triple Q’s are coming down towards the rising 20 day moving average and that support is right around $362 to $364. And then it’s possible from there we bounce and try to get another break at that resistance level right around $372, or at least fill the gap just below $369. If we fill the gap below $369 and then reject from there with high volume selling, it is possible we come back down towards $355 from a lower high rejection below $372. Now I think there’s a good reason why this could be the case because we still have Apple looking bullish, and Apple is a market moving stock, So it’s going to be very difficult for the Q’s to break down until Apple breaks down. As well. So, in the short term, look for strong support on the triple Q’s at that rising 20 day moving average with the upside target just below $369 to fill the gap. If we get rejected from there, then we’ll be looking for the possibility to come down to the breakout at $355.
The Dow Jones was down 1.04% today and the Dow Jones is breaking down below the 20-day moving average, but it’s also going to find support right above a rising 50 EMA. So, there is going to be very critical support in the Dow Jones between $336 and $337. And note the Daily Bollinger Bands are getting very squeezed. So, it is possible we are going to be due for a very large move after this period of consolidation. If you just picture this as a bull flag consolidation wedge, it’s possible we ping pong around and then get a breakout to the upside or a breakdown to the downside. Which means we could eat up a lot more time off the clock just going between $336 and $341 before we get a breakout from this consolidation. So, in the Dow Jones, in the short term, look for the gap fill above right around $342 and to the downside critical support at $337 and $336.
On the Russell 2000 I WM ETF we were down 1.61% and. We did reach the bottom of the Bollinger Bands and the rising 50 EMA. IWM is looking very bullish on weekly charts. However, all of that can change very quickly if we start to break down below critical support at $180 and $178. If we break those critical support zones, we’ll likely fill the gap at $176 and there’s another gap down here just below $172. However, make price action prove it and don’t just assume we’re going to break down. On the other hand, the bullish scenario is that we bounce up higher to close the gap above $185 and then the bullish catalyst is going to be the break of that resistance at $188. And then I think we’ll see the small caps seeing an impulsive rally towards $195 to $200
The $VIX, was up 8.74% today and the VIX did close outside the upper bollinger band. And it did close above 15, and it’s looking very close to following the arrow that I drew. That said, the VIX can likely spike out between 18 and 20 within the next couple of weeks. Remember, the VIX is going to move very quickly, but these Bollinger bands got very squeezed due to this very tight consolidation. So, it’s going to be difficult for the VIX just to go straight to 20 without some time for these Bollinger bands to expand. So, as I always say, nothing moves in straight lines. And I am giving the VIX to reach this target by sometime around the middle of July. So, we could still have another week or two before we hit these levels. However, the VIX did get very consolidated between 13 and 15. So I’m still expecting to see more volatility before this pullback or correction is over.
Bitcoin still looks possible that we’re building out this bull flag because we had the high-volume breakout and we’re sitting between this resistance at $32,000 and this support $32,500 all is still well and fine as long as we’re above this rising 50 EMA in this support breakout zone at 28,000. So, whether or not we go down towards that breakout or we just continue to bull flag before we get the bullish breakout, all of that is to be determined and only price action can tell us where we go from here. But this is still a bull flag which is a bullish pattern that could still send this to my price target at 35,000.
Apple Stock we did get the breakdown all the way back down to support which was the breakout at $190 and we had a very impulsive balance back above all the moving averages and we still have the bull trend. So, it is possible Apple tries to bounce from $190 up to the price target just below 198. This is why I say the Q’s could take a little bit longer before we go down towards $355 because Apple is a market moving stock. And it’s currently bouncing off support at the breakout. And then of course it’s always possible to get a lower high bounce from support and does not break out to a higher high and then still come test the breakout down at 185. So, we need a couple more days to see which scenario is going to play out. But watch Apple very closely at that support at $190 and if we bounce from this support, it’s possible we do go hit that higher price target before we see a deeper correction.
So, jumping back over to the S&P 500, today was important because we started to break down towards support and we found buyers yet again. And we now have gaps to fill to the upside. And we’re still in bull trend but we are starting to see cracks in the armor of the bull trends in the Dow Jones and the Russell 2000. So, the bulls need to start pushing immediately to maintain these bull trends, otherwise we are likely going to see a further pullback. Which could lead into a deeper correction. So watch the $VIX because that is telling us we are likely still going to see more volatility before this is all said and done.
Cheers,
G. Allan Collins
