2020.10.04 Weekly Market Update
October 4, 2020
Trump getting COVID threw a wrench into Friday’s markets.
There is uncertainty with the Bitmex exchange and what that means for the short-term Bitcoin market.
The charts hold a lot of information that can be quickly processed and assist with anticipation of future price movements.
I added a few extra charts that can assist in understanding some of the factors in both individual asset price movements and the broad market indices.
I hope to add more of these charts in the future.
Grains continue to look bullish, however, Soy, Wheat and Canola are overextended and last week’s anticipated correction is underway.
I recently began an Introduction to Trading and Investing Workshop that will provide you with the tools and confidence to take control of your investments.
I believe that this workshop will be of great benefit to both new traders and veteran investors. You can sign up on my website with this link: Trading and Investing Workshop.
If no dates are available, reach out to me.
Our free Telegram group, Klarenbach Research, is growing in numbers, and the members are getting more comfortable with asking questions regarding traditional markets and Bitcoin.
We post entries, stops and exits in order that members can learn how to identify low-risk high probability trades.
Some of our members are catching on really quickly and are experiencing success in their trading accounts.
This is where the majority of the ideas are posted.
This is the link https://t.me/klarenbachresearch.
I hope you check it out.
We have had success with our Trade Ideas and the ideas posted on our Telegram Group.
I have included the Trade Results Summary.
The number of trades is becoming too lengthy for this publication.
The expectancy of the Telegram Group trades is 3.91% for a 17-day hold.
Extrapolated out to a 30-day month and the result is a 6.9% monthly gain.
I adopted components of Van Tharp’s System Evaluation, which I believe is more effective for system evaluation than win rates and % gains.
MARKET REVIEW
**Click on any chart to enlarge**
SPDR S&P 500 ETF TRUST (SPY)
Last Thursday morning in the Telegram Group, we used a 30-minute chart to identify this rising wedge with the price near the .50 Fibonacci retracement level. Trump got sick and the price fell out below this wedge.
Price is below a rising 50 DMA and remains volatile.
I can not explain how technical analysis suggests a price movement in advance of a news event providing the catalyst for the move.
INVESCO QQQ TRUST NASDAQ 100 ETF (QQQ)
We also use identified this rising wedge on Thursday morning with the price at the .50 Fibonacci retracement level.
The price closed the week at the 50 DMA which it needs to regain.
SPDR DOW JONES INDUSTRIAL AVERAGE ETF (DIA)
The DIA broke below the rising wedge and closed the week below the 50 DMA. Again, the price needs to recapture the flattening 50 DMA before we get bullish.
ISHARES TRUST RUSSELL 2000 ETF (IWM)
The Russell 2000 closed the week at the 50 DMA.
TSX Composite Index (TSX)
The TSX is bouncing between the declining 50- and 200 DMA.
S&P 500 Volatility Index (VIX)
Keep an eye on the VIX.
The VIX is bouncing between the advancing 200 DMA and the 50 DMA has started curving upwards.
West Texas Oil (WTIC)
The price got back below the declining 200 DMA with the 50 DMA overhead and also declining. I expect that WTI is going lower to test the light blue VWAP from the April low near 33.00.
GOLD Spot (XAUUSD)
The price is retesting the bottom of the triangle which is the expected price action. I anticipate the price to drop to the red triangle in the 17.50 to 1820 range and then we will reassess.
US Dollar / Canadian Dollar (USDCAD)
I am testing out Trendspider again and pulled up this chart. You might remember seeing this green target area in the June 7 newsletter.
USDCAD continues to move higher, blowing through the declining 50 DMA and looks like it will test the 200 DMA.
US Dollar Currency Index (DXY)
As we have anticipated, the DXY has tested the yellow trendline.
BITCOIN (BTC)
BTC seems to be moving in correlation to the S&P 500 again.
This is my Hyperwave chart. I won’t get into all the Hyperwave rules, however, it is a fascinating concept.
I adjusted my Phase 7 line to account for the new recent price action.
Hyperwave patterns occur across all asset classes. Basically, the rules state that unless the Phase 7 line is broken, you can expect prices to retrace to the Phase 1 line. In my chart, that would mean sub $1000 BTC.
Do I think that will happen? No, I am bullish BTC.
Do I think it can happen? Yes
Am I prepared it that happens? Yes
What would be the catalyst? My guess is a worldwide depression and a stock market crash with a flight to USD. After this weeks Bitmex drama, it could involve the US attempting to regulate the unregulated exchanges,
WHEAT FUTURES (ZW1!)
The wheat price closed the week above the upper trend line of my ascending triangle. My price target is still in effect. We have been watching for this breakout since April.
SOYBEAN FUTURES (ZS1!)
SOY is extended. I would not be surprised if the price retraces to test the yellow trend line from 2012 and allowing the moving averages to catch up.
This chart could be predicting a boom in the vegetarian food market.
This market, in particular, veggie burgers will be to farmers, what the internal combustion engine was to the early oil producers.
CANOLA NOV ’20 FUTURES (RSX20)
Price is testing the area of previous resistance which I expect to break. The price extended and I expect it to first retrace, maybe test the breakout trend line from 2008 before moving much, much higher. This is bullish. Very Bullish.
TLT vs SPY RATIO
(ISHARES 20+ YEAR TREASURY BOND ETF vs SPDR S&P 500 ETF TRUST)
Keep an eye on this ratio, as it has recently broken out above the trendline from the high. This ratio can be forecast a change in direction and/or movement in the S&P 500.
SPDR S&P 500 ETF TRUST (SPY)
US DOLLAR CURRENCY INDEX (DXY)
ISHARES 20+ YEAR TREASURY BOND ETF (TLT)
ISHARES TRUST IBOXX USD HIGH YIELD CORPORATE BOND ETF (HYG)
I like comparing the price action of these four charts consisting of the S&P 500, 20+Year Treasury Bonds, the USD and High Yield Corporate Bonds.
HYG can act as an early warning for a drop in the S&P 500, a rise in the USD and a drop in 20+ year treasuries.
BITCOIN CME FUTURES (BTC1!)
US DOLLAR CURRENCY INDEX (DXY)
SILVER FUTURES COMEX (SI1!)
GOLD FUTURES COMEX (GC1!)
I find how the “safe havens” move in relation to the USD fascinating. These charts are valuable in demonstrating something that we probably already “knew”.
FACEBOOK (FB: NASDAQ)
FB is below its 50 DMA and recently fell out of a rising wedge that is more effectively-identified on a 30-minute chart.
AMAZON (AMZN: NASDAQ)
AMZN reached its .50 fib level and then broke down out of a rising wedge. The price is still below the 50 DMA increasing the probability of lower prices.
APPLE (AAPL: NASDAQ)
AAPL fell out o a rising wedge and is back below the rising 50 DMA. This week could be interesting.
MICROSOFT (MFST: NASDAQ)
The price is back below the 50 DMA which is never bullish. I see a potential head-and-shoulders pattern forming on this Daily chart. If this forms, then I expect the price to test the 200 DMA in the 180-190 area.
NETFLIX (NFLX: NASDAQ)
NFLX is back above the 50 DMA which is bullish.
ALPHABET (GOOG: NASDAQ)
Last Thursday morning, I posted a 30-minute chart depicting this rising wedge pattern. Naturally, a news event, Trump getting sick, is the catalyst for the price to fall out of this rising wedge. I expect further downside and a test of the confluence of the moving averages and the light blue VWAP.
FAANG STOCKS (FB+AAPL+AMZN+NEFLIX+GOOG)
I combined the FAANG stocks into one chart. As you can see, the price is below a declining 50 DMA. These stocks have been driving the stock market for years now.
Do you see a head-and-shoulders pattern potentially forming?
If it completes, then I can see a 25% decline in this combination to the 200 DMA and YTD VWAP.
The direction that FAANG stocks go has been determining the direction of the broad market indices.
Will that continue? I do no know.
Should we be aware of that correlation? Yes.
INVESTOR CLASS IDEAS
With the uncertainty in the market, we don't have any Investor Class Ideas for this week.
I will post in the Telegram Channel as Trade Ideas develop and are identified during the week.
Here is the link: https://t.me/klarenbachresearch
REMEMBER, CASH IS A POSITION
Don’t FOMO into a position. Have a plan.
SWING TRADE IDEAS
Swing trades will be posted as they are identified in the Klarenbach Research Telegram Channel.
We have been active in the Telegram Channel with impressive results.
Here is the link: https://t.me/klarenbachresearch
That is all for now!
Drop me a line with any questions or comments. You can do that here.
I am actively posting charts and ideas on social media.
You can find me here:
Klarenbach Research: klarenbach.ca
Telegram: Klarenbach Research
Twitter: @trentklarenbach
StockTwits: trentklarenbach
Tradingview: trent.klarenbach
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