Has the Market Popped?
September 20, 2020
Has the Stock Market Popped?
We discussed a possible correction in a number of the markets in our last newsletter. I attempted to show the amount of the correction in the applicable charts.
The FAANG stocks look especially concerning. These stocks have been driving the market. What happens if they continue to show weakness?
I am being extra cautious and will shorten my timeframe on any new positions.
Grains continue to look good, however, Soy, Wheat and Canola are overextended and due for a correction.
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. Talk to someone who is in the group and ask them how the results have been.
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 4.42% for a 17-day hold.
Extrapolated out to a 30-day month and the result is a 7.8% 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)
The SPY made new highs and found resistance at this trendline from 2013. The price closed below its 50 DMA for the first time since April, 7.8% off its high.
INVESCO QQQ TRUST NASDAQ 100 ETF (QQQ)
The NASDAQ is getting clobbered as it is down 12% from its high and closed below its 50 DMA for the first time since April.
We did anticipate a retrace in the previous newsletter,
From the previous newsletter:
This bearish engulfing candle on the weekly chart suggests lower prices to come.
SPDR DOW JONES INDUSTRIAL AVERAGE ETF (DIA)
The DOW found support at the 50 DMA and is down 5.5% from its September high.
ISHARES TRUST RUSSELL 2000 ETF (IWM)
The Russell 2000 found support at the 50 DMA and is down 5% from its September high.
From the previous newsletter:
This bearish engulfing candle on the weekly chart suggests lower prices to come.
TSX Composite Index (TSX)
The TSX closed below the 50 DMA which probably means lower prices.
S&P 500 Volatility Index (VIX)
The Telegram Group has been watching this breakout above the trendline in anticipating a retrace in the S&P 500 for a few weeks now.
West Texas Oil (WTIC)
The price got back above the declining 200 DMA and is fighting with the 50 DMA.
GOLD Spot (XAUUSD)
Gold looks weak to me with this descending triangle forming on the Daily chart, however, it is finding support at the 50 DMA.
US Dollar / Canadian Dollar (USDCAD)
USDCAD broke out of the channel and is poised to move higher. I think USDCAD will show strength this coming week and maybe test the green 50 DMA and 200 DMA.
US Dollar Currency Index (DXY)
The DXY looks like it will move higher towards the yellow trendline and the weekly moving averages.
BITCOIN (BTC)
BTC remains above the key trendline and the weekly moving averages. This timeframe is bullish.
WHEAT FUTURES (ZW1!)
We have been stalking this chart since April and the weekly price finally closed above the trendline. If price can spend some time above the ascending triangle, then I have a price target at 736’6.
SOYBEAN FUTURES (ZS1!)
This breakout above the trendline from 2012 is extremely bullish. I expect a throwback to retest the trendline and then further continuation to the upside. The price is also back above the 200-week moving average. OMG, this is BULLISH.
CANOLA NOV ’20 FUTURES (RSX20)
Price broke out above this trendline from 2008. 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 is ready to move higher meaning lower S&P 500 levels.
FACEBOOK (FB: NASDAQ)
FB has retraced 17% from its high and is now below its 50 DMA. I expect it will test the light blue VWAP from the March low.
AMAZON (AMZN: NASDAQ)
AMZN has retraced 17% from its high and is below a declining 50 DMA.
APPLE (AAPL: NASDAQ)
Apple has retraced 22% from its ATH and is sitting on a trendline from the March low below the 50 DMA.
MICROSOFT (NFLX: NASDAQ)
MSFT is now 14% off its high and below a declining 50 DMA. An area of interest is the light blue VWAP from the 2020 low.
From the previous newsletter:
This one is for you math geeks. MSFT ATH is at the 3.168 fibonacci extension from IPO. Obviously, this one can go a lot higher, however this is a level where I expect it to slow down and consolidate and perhaps experience a significant retrace.
NETFLIX (NFLX: NASDAQ)
NFLX has retraced 18% from its high and is testing the area of previous support for the third time. Will it hold? The price is below a declining 50 DMA also. My guess is not.
From the previous newsletter
I think Netflix could have one more leg down. If it does, pay attention to how it responds to the third test of the red support line at 466.55 as it gets weaker with each test.
ALPHABET (GOOG: NASDAQ)
GOOG is 15% off its high and below a declining 50 DMA. An area of interest is the confluence of the light blue VWAP from the 2020 low and previous supply.
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
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Twitter: @trentklarenbach
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Tradingview: trent.klarenbach
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