Stocks Don't Always Go Up
June 28, 2020
The title of last week’s newsletter was Inflection Point?
We asked the question, Are the S&P 500 and DOW at an inflection point?
Last week’s market close suggests that a top is in.
I believe that this market bounce was a gift and new lows are coming.
Defence wins championships.
Protecting your investments from a decline in valuations preserves your capital
How are you planning to protect your investments?
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
Our free Telegram channel, Klarenbach Research, is growing in numbers and the members are getting more comfortable with asking questions regarding traditional markets and Bitcoin.
This is the link https://t.me/klarenbachresearch.
I hope you check it out.
We have had good luck with our Trade Ideas and the ideas posted on our Telegram channel.
I have included the Trade Results Summary. The number of trades is becoming too lengthy for this publication.
As you can see, finding Investor Class Ideas has proven difficult with more success with Swing Trade Ideas and the Telegram channel. The last two weeks were pretty tough and our stops got hit quickly with the market consolidating and the volatility.
MARKET REVIEW
**Click on any chart to enlarge**
S&P 500 Index (SPX)
Price did not get above last week’s highs and closed the week below the 200 DMA.
When the price is below the 200 DMA, it is considered bearish. Price may go sideways from here, testing the 50 DMA is the nest step.
Notice the increased volume on last week’s red candle days.
The open of Futures tonight and the Monday morning market could be very interesting.
I remain a bear and will be adding to my bearish positions.
I still believe that this is a dead cat bounce and feel better about the idea this week than last.
At this time, I still consider the B Wave from my March 26 tweet near completion and am waiting for confirmation of the C wave formation.
NASDAQ 100 INDEX (NDX)
NDX made new highs last week before the 2.5% drop on Friday.
Dow Jones Industrial Average (DJIA)
The DJIA could not get back above the 200 DMA and is testing the 50 DMA. It looks like it will break down further.
Price is below the 200 DMA which is considered bearish.
I remain bearish.
ISHARES TRUST RUSSELL 2000 ETF (IWM)
The Russell 2000 is below the 200 DMA and appears to be breaking out of the channel. This is bearish from a 200 DMA perspective and will get really bearish if the price breaks below the 50 DMA.
TSX Composite Index (TSX)
Price is still below the declining 200 DMA and is testing the confluence of the YTD VWAP and the 50 DMA.
The 50 DMA needs to hold or it gets a lot more bearish really quickly.
S&P 500 Volatility Index (VIX)
Discussed last week:
The VIX is above a flattening 50 DMA, a rising 20- and 200 DMA.
What happens when the VIX rises?
A rise in the VIX most often means a drop in the S&P 500.
The VIX looks like it wants to go higher and I fully expect the S&P 500 to go lower.
West Texas Oil (WTIC)
WTI is consolidating at the YTD VWAP is quite extended. I expect WTI to drop to the $25 area, testing the 50 DMA.
GOLD Spot (XAUUSD)
Discussed last week:
Gold appears ready to break out to new highs. What does this mean for the USD and stock market?
Gold broke out higher as we discussed, retesting the resistance line and is poised to go higher.
US Dollar / Canadian Dollar (USDCAD)
USDCAD looks poised to pullback to the confluence of the downward trendline and the 50 DMA.
US Dollar Currency Index (DXY)
Discussed last week:
A wedge or channel could be drawn on this recent price action. I chose to draw a rising wedge as I am considering that the two false breakouts negate each other.
For you Star Wars fans, on the monthly chart, those two breakouts appear as the March candle representing what is known as a Darth Maul candle.
The DXY looks like it wants to pull back to test the 200 DMA or the trendline.
BITCOIN (BTC)
Short-term bearish with price below a declining 10-, 20- and 50 DMA .
BTC is still strongly correlated with the S&P 500.
WHEAT FUTURES (ZW1!)
Discussed last week:
We have been anticipating that price may test and find support at the confluence of the 200 Week and the yellow trend line. This week it happened. A long position here with a stop below last week’s low looks attractive to me.
Maybe this is a good time to go long Wheat?
SOYBEAN FUTURES (ZS1!)
Buyers were found at the light blue YTD VWAP and the week closed lower.
I am bullish Soybeans.
TLT vs SPY
(ISHARES 20+ YEAR TREASURY BOND ETF vs SPDR S&P 500 ETF TRUST
Capital moved from the S&P 500 to Bonds this week.
FACEBOOK (FB:NASDAQ)
The first of the FAAMNGs.
FB finished the week down 8.32% on Friday. Check out Friday’s volume candle. Nasty.
AMAZON (AMZN:NASDAQ)
AMZN closed down 2.24% on Friday.
APPLE (AAPL:NASDAQ)
Another leader with a bad Friday, down 3.07%
NETFLIX (NFLX:NASDAQ)
Another of the FAAMNG stocks. This one down 4.83%.
ALPHABET (GOOG:NASDAQ)
GOOG down 5.45% on Friday.
INVESTOR CLASS IDEAS
A few the Investor Class opportunities this week. I will be keeping an eye on Biotechs, Gold and Silver stocks.
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.
YAMANA GOLD (AUY:NASDAQ)
AUY looks like it is breaking out above this bullish flag pattern and is above the advancing moving averages.
I am interested in an Investor Class or Position trade above Friday’s high of 5.34 with a stop below 4.66.
VANECK VECTORS JUNIOR GOLD MINERS RTF (GDXJ:NYSE)
GDXJ is above the advancing Moving Averages and looks like it is breaking out of the bullish pennant.
I am interested above Friday’s high of 47.54 with a stop below 41.93.
SWING TRADE IDEAS
The market feels toppy to me and after last week's experiences, I am giving the market time to indicate it's direction.
Swing trades will be posted as they are identified in the Klarenbach Research Telegram Channel.
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
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