The market continues last week’s theme of having an insane lineup of economic announcements with some of the highlights being the FED
Manufacturing Surveys, GDP on Wednesday, Jerome Powell on Wednesday, and the ISM Manufacturing Index this Friday.
All of the other major events below could also influence the market and expectations going forward, so make sure to keep a close eye on the calendars this week. The SP500 and other indexes did manage to
break above the previous lower low last week, which is showing a failure to go lower from the bears.
If the bulls can break the last lower high pivots on the various indexes this week, the market could be putting in a potential short term bottom in the short term. With all of this being said though, the VIX remains above $20-$25 and there is still high risk associated with the market right now, so tread carefully!
Top Economic Announcements
- Durable Goods Orders Reported Monday @8:30 AM EST
- Dallas FED Manufacturing Survey Released Monday @10:30 AM EST
- International Trade in Goods Reported Tuesday @8:30 AM EST
- FHFA House Price Index Reported Tuesday @9 AM EST
- Consumer Confidence Reported Tuesday @10 AM EST
- Richmond FED Manufacturing Index Released Tuesday @10 AM EST
- FED Mary Daly Speaks Tuesday @12:30 PM EST
- FED Loretta Mester Speaks Wednesday @6:30 AM EST
- GDP Reported Wednesday @8:30 AM EST
- Corporate Profits Reported Wednesday @8:30 AM EST
- Jerome Powell Speaks Wednesday @9 AM EST
- State Street Investor Confidence Index Released Wednesday @10 AM EST
- Survey of Business Uncertainty Released Wednesday @11 AM EST
- Jobless Claims Reported Thursday @8:30 AM EST
- Personal Income & Outlays Reported Thursday @8:30 AM EST
- ISM Manufacturing Index Reported Friday @10 AM EST
Broad Market Analysis
The SP500 made a solid comeback last week, with it managing to close above the previous lower low on Friday.
This to me spells a potential reversal, as long as the SP500 can maintain over 3800-3850.
If it can hold 3800 and trend higher in the coming weeks to re-test the previous lower high at 4200, then that would be a major pivot point.
Any move above 4200 (preferably acceptance over 4300) would indicate a reversal in the short term downtrend and the SP500 would trend higher towards targets of 4300/4400/4450 and potentially higher.
If the SP500 cannot manage to break the previous lower high at 4200 and gets denied, then expect the SP500 to sell off and re-test the most recent lows at 3640-3650. As long as 4200 remains the previous lower high and the SP500 sets another lower high, then expect 3650 to be tested and potentially lower to 3600/3500/3400.
Considering that the VIX has failed to break over $30 again, I would expect some juice from this rally at least in the short term.
$US30: Dow Jones Industrial Average
The Dow also managed to break back above the previous lower low, after it also re-tested and held the key level of 30000 support.
As long as the Dow stays above 30000, then the bulls may have a shot here at reversing the short term downtrend. In order for this to happen though, the Dow will need to break above the previous lower high at 33500. There is a lot of resistance between 33500 & 34000, so ideally you would want to see the Dow break over 34000 for confirmation
With that being said, the Dow is still a ways off from reversing the trend and major resistances at 32000/32500/33000 remain above.
If the Dow can clear these resistances in the weeks to come, then the bulls will have a chance at reversing the trend.
Under 30000 on the Dow and the trend will instantly revert back to bearish and call for targets of 29000/28500/28000/27500 and potentially lower.
US100: Nasdaq 100
The Nasdaq broke above the previous lower low pivot last week at 11750 as well. If the Nasdaq can maintain momentum and price action above 11750, we would expect the Nasdaq to trend higher towards resistance at 12250-12300/12750/13000.
13000 is obviously a major pivot on this chart for many reasons, with it easily being the most key level to watch going forward. If the Nasdaq breaks over 13000, that will shift the short term downtrend and call for higher prices. Technically and psychologically, 13000 is a major level, so any price action sustained above this level is also very bullish.
Over 13000 and the Nasdaq should returns to resistances at 13500/13750/14000/14500.
If the Nasdaq does not maintain bullish price action above 11750 and sets a lower high compared to 13000, look out for new lows on the Nasdaq. Targets on a break of 11750 are 11000. Anything below 11000 and targets are 10500/10000/9500/9000.
$US2000: Russell 2000
The Russell might actually be the saving grace of the entire market right now, with it managing to hold the key support level of 1700 last week.
Last week we highlighted how if the Russell holds this level, that would be a potential double bottom at the previous highs of the prior trend. For anyone unfamiliar, this is a textbook back test setup as long as 1700 holds.
Back tests are usually very bullish in the long term, but it could take some time for the chart to bottom out here no doubt. As long as 1700 holds and price is accepted above this level, the Russell’s next target is 1900-1950 where the last lower high is. Anything over 1950 and the Russell will head to psychological and major technical resistances of 2000-2100. These levels are extremely strong and its important to remember that even if the Russell breaks over 1950, it is still technically in a downtrend.
All in all though, this is a pretty textbook looking back test and it would be extremely bullish in the long term if a potential bottom formed here.
Anything below 1700 though would be extremely bearish and the Russell would move to targets of 1600/1550/1500/1400. Any breakout to these levels would be extremely bearish for the broad market as well.
$VIX: Volatility Index
Once again the VIX failed to break over $30-$35 resistance, which has been formidable resistance for practically a whole year now. If the VIX continues to hold below $30, look for the VIX to returns to supports at $25/$20. Either of these levels could provide a solid bounce for the VIX as they are major supports.
Additionally, the last higher low on the VIX is set at $25. As long as VIX can maintain above $25 and set a higher low above that, then there is a chance the VIX could retake $30 and move to $35/$40 resistances as it has in the past.
If $25 is broken, then the higher low pivot is broken and the short term uptrend is also broken. This would call for the VIX to test $20, which is the last line of defense for the broad market bears. Anything below $20 and the VIX goes back to supports at $18/$16/$14/$12.
All in all, the VIX has been setting some lower highs here, but it is also trending upward in terms of higher lows. The VIX could break either direction here, but it’s going to make a major move very soon. Look out for high volatility!
$XAUUSD: Spot Gold
Gold is still failing to break over 1880-1900 resistance, with it holding below it for quite some time now. I am beginning to believe that this could be a potential top forming, with the weekly time frame looking like a pretty clear double top.
With this being said though, there is still a potential chance for the bulls on Gold as long as 1800 holds. Anything below 1800 and Gold is 100% going to selloff massively down to targets of 1750/1700/1650/1600 and potentially lower.
The only reason Gold still has a chance here is because the last higher low is set at 1795-1800, which is the key level for Gold going forward.
If Gold can hold 1800 and break above 1880-1900, then look for Gold to make an explosive move to the upside with targets of 1950/2000/2050/2100 and potentially higher.
At the end of the day, this chart has no setups until either 1800 breaks or 1900 breaks. Be patient and Gold will reward you, it tends to make explosive moves when it does breakout.
KR is consolidating nicely here on all timeframes and are chilling right in the macro golden pocket as well. KR is a great long term add down here, but we can also see them making a nice intra-week trade as well!
If KR can break over $48.62, KR has a lot of room up to our 1st target at $50.71, our second target at $51.73, & our 3rd target at $53.07.
If KR breaks below $47.56, then we could see a continuation of the bearish move back down to $46 area.
$TSM: Taiwan Semiconductor
TSM is in an interesting spot here. They are at a nice macro demand zone and put in a nice doji weekly candle. Lets not get this mixed up, this weekly trend is heavily bearish, but if TSM can break over $87.75, we think it could see a nice DCB. They also have earnings coming up so a pre earnings run up could be in the cards as well.
If this weekly thesis plays out, a target of the weekly lower high near $95 would be a good target.
If TSM breaks below last weeks low, look for a continued consolidation/move back down to the mid $70’s.
TSM is still a great company and we think you could comfortably add long term shares down here as well.
BA played out perfectly from last week with the weekly failure to go lower and relative strength!
BA has officially cleared the critical level of $140.85 and has clear skies up to $148.93. We also have targets up at $151.40 & $157.28. As long as the market does not hit us with the reverse 180, BA should be a top long watch for the week.
If BA does begin to pullback, there is still massive support back down near $130.61. As long as this level holds, BA can continue to remain bullish on the daily frame, but this would not look too good on the weekly chart.
NVDA had a monster day on Friday and actually triggered some bullish developments. They had a nice failure to go lower pattern set up on Thursday and officially triggered that with Friday’s candle. If NVDA can clear and accept over $171.86, there is room up to our level at $186.12.
Make sure to keep an eye on the gap fill at $180.41 as well. Keep in mind that NVDA is still in a heavy downtrend so we could see a failure and move lower at any point, but if the market continues to hold strong, NVDA should follow.
If they do pullback, look for support at $168.61 & $163.20.