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Friday, April 24, 2020

Technical Update - Weekly Wrap-up 4/24/2020

Seeing futures high which is no surprise on this weekly options expiration. Since every technical trader watches the $SPX, the thing to watch is the 50 day moving average.

$SPX - this daily candlestick chart can be found in the public charts area. Find the link to the PCA in the side menu.

The technicals are being driven to moving averages, and that's been the case, since most everything found support at the 200 week moving averages, back in March, so trying to find chart patterns is a waste of time.

I pointed this out in March, and the results a months later, using MERCK as an example.

 Several sectors have lead the biggest rally since the 1930's - all the usual suspects. Tech, including already over bought FAANG stocks, $SOX, and gov. subsidized Healthcare. Too bad there is no longer a 3X healthcare bear, but $SICK no longer exists.

$NDX - Again Check out the 50 day ma!

$AAPL "" This is one to watch

$AAPL a month later

So, why are moving averages working? Could be computer trading, but the market typically back-tests the 200 day ma, after a crash into a bear market. Market makers, don't know where technical support or resistance is. They don't use resistance lines, because they couldn't chart their way out of a paper bag. Moving averages are simple, and when you drive the $NDX above the 50 day ma, it looks like a bullish signal to the average retail investors, and it's easy to unload your shares, as you see them continue to buy $AAPL.   

Miners have been one of the best performing sectors, of all, and you can see the chart pattern on the $GDM. Upturned triangles at the end of a long run, are super-bearish.  I think it can pull back, and make another run at the highs, before collapsing, but I'm looking forward to selling this sector. $DUST and $NUGT actually follow the $GDX, which is totally rigged, but the $GDX isn't going to decouple from the $GDM.

If you've never traded the 3X miner funds, you shouldn't. These are super volatile, and 15% swings are nothing.

The Dow is lagging: Hasn't even tested the 50 day ma (@ 24090.

It scares me when certain sectors are trading at recent highs, and other sectors - like energy - are trading near all time lows. It sets up for a re-balancing, and with the $VIX still trading in the uper 30's, bad things can happen. 

Longer term Dow chart - located in the public charts area - looks like a crawl back into the bullish channel, so this rally looks like a repeat of the 2019  rally, which ended in disaster.

Longer term, it's too soon to say, but the support levels I pointed out in my latest FACE interview continue to hold.

I'm outta time. Maybe I'll lay out my longer term outlook in a future update.

Have a Good Weekend,

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