Hey there, good evening!
On Friday, the S&P 500 ETF, also known as SPY, was up a modest 0.06 percent. It’s worth noting that prior to the pullback, we were outside the Upper Bollinger Band and actually reached the price target at 6,451. Currently, there’s a possibility of hitting the weekly level around 453, and if we manage to break through the resistance at 453, we could potentially return to the previous all-time high. However, we shouldn’t get too far ahead of ourselves. We need to see the price action prove it, specifically with a weekly close above 453. It’s important to let the price action do the talking and not assume that the bull trend will roll over and die. We should wait for confirmation through a lower high and a lower low on the daily chart.
Now, let’s shift our attention to the NASDAQ 100 QQQ. Last week, we received a sell signal on the QQQ, but for those looking to improve their trading skills or starting their trading journey, there are still factors to consider. On Friday, the Triple Qs remained relatively flat, only going down by 0.02 percent. The reason for this was the significant overextension outside the Upper Bollinger Band, making it challenging for the bulls to continue pushing higher. However, as the Bollinger Bands expand, it should become easier for the bulls to maintain upward momentum. Keep in mind that there are gaps to the downside at 374 and just below 369, which have a high likelihood of being filled. So, while we’re currently overextended in the short term, it’s important to let the price action guide us and be aware of the potential downside gaps.
Turning our attention to the Dow Jones, it was up 0.36% on Friday. The Dow is attempting to break out above the resistance at 345, with strong resistance also present at 346. Breaking through 346 could indicate a continuation of the bull run, leading to a higher low and another higher high breakout. On the other hand, if the Dow gets rejected from 345 or 346, we could see a gap fill around 343 and critical support around 341. It’s important to keep an eye on these levels and be mindful of potential gaps to fill at lower prices.
Moving on to the Russell 2000 IWM ETF, it was down 0.98% on Friday, and although it seemed like the small caps were trying to fill the gap at 190, they lacked the necessary momentum to do so. It wouldn’t be surprising to see a continued pullback early in the week to close that gap. However, if we manage to hold the breakout at 188, it would still be considered a bull breakout. In that case, a bounce from 188 would indicate the potential for a continuation of the bull trend, aiming for targets in the 195 to 198 zone. While there’s always a level of uncertainty, the strong weekly charts in small caps suggest a higher push into the 190s. However, if support at 188 is broken, we could be looking at the next support level around 132 on the ARK ETF.
Speaking of the ARK ETF, it appears that it may be breaking out of the bear market. The bear market resistance trend line around 48 seems to have been broken, and we’ve seen a higher low around 35 and a higher high above 44. This breakout suggests a potential return to the bull trend in the ARK ETF. It’s important to pay attention to the retest of the breakout support between 44 and 46. Holding that support and continuing to push higher would confirm the breakout, indicating a potential bullish market in ARK. However, a retest that fails and leads to a continued decline would indicate a false breakout, suggesting that the bear market is still in effect.
Switching gears to the VIX, it was down 1.84% on Friday, sitting in the low thirteens once again. Historically, when the VIX is below 15, it indicates a low fear, bull training environment. So, unless we see a spike above 15, we shouldn’t be overly cautious. Only then would we start considering the possibility of reaching the zone between 18 and 20.
Now let’s talk about Bitcoin, which is currently trading around 30,350. It’s currently in a bull flag pattern between 29,000 and 31,000. Until it breaks out of this pattern, it’s challenging to predict Bitcoin’s direction. However, being a bull flag, there’s an increased probability of an upside breakout, potentially reaching the price target at 35,000. On the flip side, if it breaks down below $29,000 and exits the bull flag pattern to the downside, it’s advisable to exercise caution and consider a risk level around $28,000.
Moving on to Tesla stock, it was up 1.25% on Friday and is currently hovering around the resistance level of 282.5-283. Breaking through this resistance could lead to further upward movement towards 295 and 312. However, if it gets rejected from 282, we could see a double top formation with a breakdown below the neckline at 267. Additionally, there are gaps to fill at 264 and 235. It’s crucial to remain aware of the resistance levels and be prepared for potential outcomes.
Now, let’s discuss Apple stock, which remained flat on Friday. It seems to be holding above the support level at 190, suggesting a possibility of a higher low formation at 188 and a push towards 197. To confirm a breakout, we would need to break the resistance levels at 192 and 194. Staying bullish above 190 or within the support zone around 188 could indicate a continuation of the bull trend. However, if the support is broken, we shouldn’t rule out the possibility of a decline towards lower support levels between 182 and 185.
Shifting our focus to the financial sector, it was down 0.67% on Friday. We saw a gap up outside the Upper Bollinger Band, which was a good opportunity for profit-taking, followed by a bullish Engulfing candle that’s close to closing the gap to the downside. In the financials, staying bullish above the 200 daily moving average, around 33.7, would be a prudent approach.
Looking at the industrials, they were down 0.29% on Friday. The pullback can be seen as an overcorrection of the overextended conditions caused by being far outside the Upper Bollinger Band. The healthcare sector, on the other hand, was up 1.5% on Friday, with price action above all the moving averages. Breaking the resistance around 132 to 133 could trigger a bull breakout, potentially leading to higher prices at 134 and 137.
On the energy sector, it was down 2.64% on Friday. We witnessed a close of the gap to the upside, followed by a rejection from the 200 daily moving average. If this rejection continues, we might see a gap fill at 73, particularly if the support around 80 is lost.
Lastly, let’s revisit the S&P 500. We find ourselves at a critical resistance level heading into the next week. It’s worth noting that we are currently overextended, especially with the triple Qs. When we get too far outside the Upper Bollinger Bands, there’s an increased risk of a pullback, coupled with the presence of gaps to fill on the downside. However, it’s important to remember that we are still in a powerful bull trend, and it’s common to see short squeezes occurring as some short sellers attempt to call tops in the market. While there is an elevated risk of filling the gaps in the near future, it doesn’t guarantee that they will be filled next week. Always prioritize great risk management, keep an eye on critical levels, and define your risk levels to navigate the market successfully.
There’s A Lot Of Gaps Below Sir!
July 17, 2023