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Blow Off Top?

July 14, 2023
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G. Allan Collins
Thursday July 13, 2023

Today, we saw some interesting market movements, particularly with the short squeeze on SPY. It seems there’s a good chance that reaching the upper targets could lead to a significant pullback, potentially filling the gap below. It’s crucial to closely monitor the next two targets and keep an eye on the weekly chart as well. If we surpass the 450s and break the March 2022 highs, we might even retest the previous all-time highs in the 470s. Considering the daily chart, it’s important to pay close attention to the critical resistance zone around 450s. The current price targets are set at 451 and 453.

The recent bull breakout following the CPI data seems to be driving a short squeeze, with many short sellers now covering their positions. This short squeeze, along with new short sellers entering the market, is likely pushing prices higher. However, it’s worth noting that this increase might not necessarily be driven by organic buying or new buyers entering the market. At this point, we’re primarily focused on squeezing out the bears. If we experience a pullback, it could potentially attract new buyers, especially if we fill the gap and continue to rise. This influx of new buyers would be the catalyst for retesting the previous all-time highs. In the short term, it seems the market is predominantly driven by the short squeeze, and we’re approaching two critical resistance zones with the mentioned price targets. It’s important to remember that as long as we’re forming higher lows and higher highs, the path of least resistance remains higher. There are no definitive limitations on how high we could go, but we must respect the critical resistance. On the downside, we’re looking for support around 443 to 444, and as long as we continue to establish higher lows and higher highs, the bull trend remains intact. A lower low would require a breakdown below 438 to 436 on the NASDAQ 100.

SELLL SIGNAL STILL INTACT: I will continue to update the technicals for aggressive traders.
We are still short $NVDA and $TSLA we added more today, I would not be surprised if we rally on the
bank news and the short squeeze that is almost finished. If you are liong please use stops snd do not get greedy. When We get a sell signal it’s rare if we don’t get it pretty quickly but it can take longer, Injust don’t want to be in for the last 2% if the bulls are lucky another 2% but on the scale of risk reward a long
trade has almost no upside after Friday if The Market stays up on Friday that is.

Moving to the triple Qs, which were up 1.7%  today, and once again, we saw a gap up, further contributing to the short squeeze outside the upper Bollinger Band. The short squeeze was triggered by the break above 372. If we surpass 372, there’s a good chance we’re heading towards 393. However, similar to SPY, we should consider the possibility that this is primarily a short squeeze. In that case, we might see a pullback and a subsequent filling of the gaps to establish another higher low. Only then, with the help of buyers, can we aim for the higher targets. I’m not making any predictions; I’m simply presenting a possible scenario. Even if we do experience a pullback after the short squeeze, it doesn’t necessarily indicate a bearish trend, as long as we hold critical support zones, which in the case of triple Qs would be around 365. As long as the support holds, we maintain the bullish outlook, allowing for potential upward movement. We should also consider the possibility of going straight to the target and filling the gaps at a later date. For the triple Qs, a bullish stance is maintained above 370 to 372, despite the potential short-term pullback and gap filling.

The Dow Jones saw a modest 0.08% increase today, as it didn’t fully participate in the market rally. The resistance at 345 and 346 might explain this behavior, but we expect the index to start pushing higher towards the 350s. Critical support remains at 341, with a gap fill at 343.

Regarding the Russell 2000 VW ETF, it enjoyed an 0.81% increase today, continuing to establish higher highs outside the upper Bollinger Band. The gap fill is still pending at 190, and as long as we stay above the breakout at 188, the bullish sentiment persists. The next upside targets are 195 and 198. In case of a pullback, support should be found around the gap at 190.

The VIX recorded a 0.37% increase today, and although it showed a hammer candle, it remains below 15. Unless the VIX spikes back above 15, we don’t anticipate any significant volatility or fear catalysts. It seems the bullish breakouts are contradicting earlier predictions.

Bitcoin experienced a 2.6% increase, currently hovering above 31,000 in a bull flag pattern. A break above this resistance would signal a bull flag breakout, potentially leading to the next price target at 35,000. Staying bullish is advised as long as support holds around 29,500.

Apple stock rose by 0.41% today, reclaiming its position above all the moving averages and maintaining the breakout above 190. Resistance levels to watch for are 192 and 194. Should the bull trend continue, the price target falls just below 198.

To summarize SPY’s overall trend, it’s clear that we’re in a bull trend based on the price action. It’s essential to recognize this trend until it shows signs of reversal. If one intends to adopt a bearish outlook, it’s important to manage risk at critical levels of resistance, particularly in the 451 to 453 range. Breaking through those levels would lead to a retest of the previous all-time high. Remember, the trend remains your friend, and it’s crucial to manage risk when trading and avoid taking on excessive risk in any single trade. This approach will likely lead to better trading outcomes.


G. Allan Collins


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