G. Allan Collins
Thursday August 3, 2023
In today’s market analysis, we observed a decline in the SPY by 1.39%, closing below the critical support level of $452 at 450.15 on higher trading volume. Currently, the market is positioned just above the rising 20-day moving average, with the next support level at 448. However, it’s important to note that there is a strong likelihood of a potential pullback towards the gap at 443, where a retest of the breakout from the June 15th high may occur. This could signify a higher low within the ongoing bull trend.
While some investors may view this pullback optimistically as an opportunity for a potential bounce from the rising 20-day moving average, it is essential to remain cautious. Critical support lies just below at 448, and if breached, the market could head towards the gap at 443. It’s worth considering the upside resistance as well, around the gap at 455, where a potential lower high rejection may occur. Managing risk in the range of 450 to 448 is advised.
Regarding the NASDAQ 100 Triple Q’s, a decline of 2.19% yesterday brought it to the critical support level of 374. Bulls must hold this level to sustain a potential bounce higher. However, there is a possibility of a lower high formation, as discussed earlier, leading to a test of lower gaps around 374 and 368. The market’s response at 374 will determine its direction, and the upside resistance lies just above at 380.
The Dow Jones experienced a decrease of 0.97%, still hovering around the breakout support at 353. A further decline may lead to filling the gap at 350, which aligns with the rising 20-day moving average. Conversely, a move higher towards 361.75 remains a potential price target. It’s crucial for investors to monitor their positions in relation to the 353 level to determine the market’s trajectory.
Turning to the Russell 2000 IWM ETF, a 1.36% decrease placed it directly on top of support at the breakout level of 195. Further decline could lead to support around 192.95, and the upside resistance remains at 198 and 202.79. Investors should be vigilant around the 46.72 level, as breaking below it may indicate a false breakout and a potential downward movement.
The VIX saw a significant increase of 15.49%, breaking above 15, indicating heightened caution. Elevated VIX levels often signify growing panic and potential selling pressure in the market. While the VIX may not rise much higher, it is prudent to remain cautious during this period.
In the cryptocurrency market, Bitcoin is currently down about 1.8% and appears to be finding resistance at the negatively sloping 20-day moving average around 29,000. Investors should closely monitor this level as a breakout above 31,000 could signal a more bullish trend, while remaining cautious about lower prices until such confirmation.
Regarding individual stocks, Tesla experienced a 2.67% decrease, and approaching the rising 50-day EMA at 235, it may encounter further downward pressure. For those looking to trade Tesla, short positions are suggested for a smoother experience, as catching a falling knife may prove risky, especially if the stock falls below 230.
Apple saw a decline of 1.55% and is currently positioned atop the rising 20-day moving average. The support at 194 has been broken, and the stock may be losing its support trend line. With earnings on the horizon, uncertainty prevails, making it challenging to predict its direction. A potential gap fill could lead to a downward movement towards the rising 50-day EMA around 187 to 188.
In conclusion, amid the current market volatility, it’s crucial to approach trading with a well-prepared trade plan that accounts for various scenarios. While there might be noise regarding credit downgrades and bearish sentiments, it’s essential to stay vigilant and consider historical market behavior. Monitoring critical support and resistance levels is key to making informed decisions based on the prevailing price action.
G. Allan Collins
P.S. Daily Trade: Short Expedia At $108.25 First Price Target $98. Put GTC Stop Limit $113