Chart Evaluation of the market 8/18/2024 done by me

Luckyone

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Aug 19, 2024
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DOW Friday Closing Price - 40659
SPX Friday Closing Price - 5554
NASDAQ Friday Closing Price - 19508
RUT Friday Closing Price - 2141

The indexes have seen a strong recovery from the recent fall. For example, the SPX has rallied 8% over the past two weeks, after having dropped 9.8% in value over the 4 weeks prior to that. There has not been any "major" change in the fundamental picture either way, meaning that it has been more about speculation and emotion than it being due to any actual tangible news. Nonetheless, the bulls presently have the short-term control after all indexes (with the exception of the DOW) broke short-term resistance levels that were not expected to break, if and when the original outlook of a potential depression had any merit to it. Evidently and based on the reports this past week (Retail Sales and weekly Initial Claims), things are still moving positively forward, meaning that a potential recession is not in the cards at this time.

Having said that and looking at the overall fundamental picture and the charts, it is unlikely that any new all-time highs will be made, given that all the reports this month have shown that there is a slow-down occurring in the economy. This likely means that this move up seen over the past 2 weeks will turn out to simply be the required/needed retest of the all-time highs, which is normal in any chart scenario when the market has found a top to the rally, or at least a temporary top. This scenario might have been in question under any other situation where the market was not facing the seasonally worst month of the year (September). Nonetheless, with the economic slowdown, the Fed not expected to do anything until the end of September, and the high volatility being seen (which is not normal in a rising market), it is unlikely that much further upside will be seen during the next 2 weeks. In fact, it would surprising if the market does not find a recovery top this week (or at the latest the next) and start moving down as September nears. There are no reports of consequence scheduled for the rest of the month, meaning nothing that could help the bulls maintain this rally for much longer.

Down to specifics, here they are. The DOW did make a new all-time weekly closing high on Friday (40659 - above the previous one at 40589) but on an intraweek basis, there are 2 higher previous intraweek highs at 41198 and at 41376. The index did close on the high of the week and further upside above last week's high at 40726 is expected to be seen. With the previous high being 178 points lower than the all-time intraweek high, it is possible that the index will get up as high as the 40,000 demilitarized zone (40970-41030) but it will have problems going higher.

The SPX has no previous intraweek retest of the all-time intraweek high at 5669 but the all-time high weekly close is at 5615 and there is an open gap at 5639. Both of those levels are magnets. The former is likely to be reached but the latter (the gap) is at best a 50-50 proposition. The index closed on the high of the week, suggesting further upside above last week's high at 5561 is expected to be seen this week. Having said that, the bulls do have a couple of chart resistance points that will cause problems. First, there is a decent intraweek resistance at 5566 that did not get broken on Friday. If it does get broken, there is a minor intraweek resistance at 5585. More importantly, the daily close level that was pivotal support and when broken brought all the selling interest, is found at 5584. It is highly doubtful that level will be broken on a daily closing basis. With the index closing at 5554 on Friday, it suggests that on a daily closing basis, no more than 30 points will be seen to the upside.

The NASDAQ continues to be the laggard of the indexes and that should not change, based on the fundamental and seasonal picture being seen at this time. As such, this index is likely to continue to underperform. The index closed on the high of the week and further upside above last week's high at 19561 is expected to be seen. The initial weekly close breakdown point was 19682. Having closed on Friday at 19508, further upside (on a weekly closing basis) should be no more than about 154 points. Having said that, the bulls will be facing a tough situation starting Monday, given that the original breakdown point (on a daily closing basis) was 19522. In addition, there is a breakaway/runaway gap formation with the runaway gap being at 19736. This formation was created with tangible negative news for the Tech industry, and as such, should not be closed. This means that the index has very limited intraweek room to the upside (likely less than 200 points) and extremely limited upside on a daily closing basis. Then again, this index is the one that the traders will be watching closely, given that if it closes the runaway gap and generates a clear close above 19522 on any day this week, this will give the bulls new ammunition (above what they have now).

The RUT continues to be one of the important indexes to watch, especially given that it is likely to continue to outperform the other indexes (based on the fundamental and chart picture involved). Then again, the index does have very clearly defined levels of chart resistance/objectives that are likely to be reached but are short-term pivotal. For example, and using the weekly closing chart, the index previously generated 2 weekly closes above an important weekly close resistance at 2159 (closed at 2184 and at 2209) but then gave a failure signal 3 weeks ago, when it closed at 2109. That failure signal has now been confirmed for the last 2 weeks with closes at 2080 and on Friday at 2142. Getting back up to 2159 (on a weekly closes basis) is highly likely but what it does there, is going to be indicative. On a daily closing basis, the 2184 level is important, given that when that level got broken to the downside, it brought about the failure signals given. This chart picture does suggest that the index could go up 42 points (on a daily closing basis) but it is unlikely to go any further. Then again, this index should outperform the rest of the market, so these levels are very important to the index.

Having said all of the above, it is likely that further upside will be seen this week but limited in nature. If the levels mentioned above are reached, the probability of the indexes beginning to move down is high. As such, the question in play is "when will those levels be reached (this week or next)"?
 
DOW Friday Closing Price - 40659
SPX Friday Closing Price - 5554
NASDAQ Friday Closing Price - 19508
RUT Friday Closing Price - 2141

The indexes have seen a strong recovery from the recent fall. For example, the SPX has rallied 8% over the past two weeks, after having dropped 9.8% in value over the 4 weeks prior to that. There has not been any "major" change in the fundamental picture either way, meaning that it has been more about speculation and emotion than it being due to any actual tangible news. Nonetheless, the bulls presently have the short-term control after all indexes (with the exception of the DOW) broke short-term resistance levels that were not expected to break, if and when the original outlook of a potential depression had any merit to it. Evidently and based on the reports this past week (Retail Sales and weekly Initial Claims), things are still moving positively forward, meaning that a potential recession is not in the cards at this time.

Having said that and looking at the overall fundamental picture and the charts, it is unlikely that any new all-time highs will be made, given that all the reports this month have shown that there is a slow-down occurring in the economy. This likely means that this move up seen over the past 2 weeks will turn out to simply be the required/needed retest of the all-time highs, which is normal in any chart scenario when the market has found a top to the rally, or at least a temporary top. This scenario might have been in question under any other situation where the market was not facing the seasonally worst month of the year (September). Nonetheless, with the economic slowdown, the Fed not expected to do anything until the end of September, and the high volatility being seen (which is not normal in a rising market), it is unlikely that much further upside will be seen during the next 2 weeks. In fact, it would surprising if the market does not find a recovery top this week (or at the latest the next) and start moving down as September nears. There are no reports of consequence scheduled for the rest of the month, meaning nothing that could help the bulls maintain this rally for much longer.

Down to specifics, here they are. The DOW did make a new all-time weekly closing high on Friday (40659 - above the previous one at 40589) but on an intraweek basis, there are 2 higher previous intraweek highs at 41198 and at 41376. The index did close on the high of the week and further upside above last week's high at 40726 is expected to be seen. With the previous high being 178 points lower than the all-time intraweek high, it is possible that the index will get up as high as the 40,000 demilitarized zone (40970-41030) but it will have problems going higher.

The SPX has no previous intraweek retest of the all-time intraweek high at 5669 but the all-time high weekly close is at 5615 and there is an open gap at 5639. Both of those levels are magnets. The former is likely to be reached but the latter (the gap) is at best a 50-50 proposition. The index closed on the high of the week, suggesting further upside above last week's high at 5561 is expected to be seen this week. Having said that, the bulls do have a couple of chart resistance points that will cause problems. First, there is a decent intraweek resistance at 5566 that did not get broken on Friday. If it does get broken, there is a minor intraweek resistance at 5585. More importantly, the daily close level that was pivotal support and when broken brought all the selling interest, is found at 5584. It is highly doubtful that level will be broken on a daily closing basis. With the index closing at 5554 on Friday, it suggests that on a daily closing basis, no more than 30 points will be seen to the upside.

The NASDAQ continues to be the laggard of the indexes and that should not change, based on the fundamental and seasonal picture being seen at this time. As such, this index is likely to continue to underperform. The index closed on the high of the week and further upside above last week's high at 19561 is expected to be seen. The initial weekly close breakdown point was 19682. Having closed on Friday at 19508, further upside (on a weekly closing basis) should be no more than about 154 points. Having said that, the bulls will be facing a tough situation starting Monday, given that the original breakdown point (on a daily closing basis) was 19522. In addition, there is a breakaway/runaway gap formation with the runaway gap being at 19736. This formation was created with tangible negative news for the Tech industry, and as such, should not be closed. This means that the index has very limited intraweek room to the upside (likely less than 200 points) and extremely limited upside on a daily closing basis. Then again, this index is the one that the traders will be watching closely, given that if it closes the runaway gap and generates a clear close above 19522 on any day this week, this will give the bulls new ammunition (above what they have now).

The RUT continues to be one of the important indexes to watch, especially given that it is likely to continue to outperform the other indexes (based on the fundamental and chart picture involved). Then again, the index does have very clearly defined levels of chart resistance/objectives that are likely to be reached but are short-term pivotal. For example, and using the weekly closing chart, the index previously generated 2 weekly closes above an important weekly close resistance at 2159 (closed at 2184 and at 2209) but then gave a failure signal 3 weeks ago, when it closed at 2109. That failure signal has now been confirmed for the last 2 weeks with closes at 2080 and on Friday at 2142. Getting back up to 2159 (on a weekly closes basis) is highly likely but what it does there, is going to be indicative. On a daily closing basis, the 2184 level is important, given that when that level got broken to the downside, it brought about the failure signals given. This chart picture does suggest that the index could go up 42 points (on a daily closing basis) but it is unlikely to go any further. Then again, this index should outperform the rest of the market, so these levels are very important to the index.

Having said all of the above, it is likely that further upside will be seen this week but limited in nature. If the levels mentioned above are reached, the probability of the indexes beginning to move down is high. As such, the question in play is "when will those levels be reached (this week or next)"?
Inflation works both ways dimtard. Overinflation of values and stock market now comes crashing dowwn when reality hits.
 
Inflation works both ways dimtard. Overinflation of values and stock market now comes crashing dowwn when reality hits.
Thanks for the information. You should be aware that I have been doing chart analysis on the market for 47 years and did it professionally for the top two firms in the industry in the 80's (Merrill Lynch and Pru-Bache). I have been through 3 inflationary periods in the 47 years I have been doing this. I am well aware of what inflation is and what causes it. Perhaps you want to explain this data:

Inflationworldvsus.jpg
 
Thanks for the information. You should be aware that I have been doing chart analysis on the market for 47 years and did it professionally for the top two firms in the industry in the 80's (Merrill Lynch and Pru-Bache). I have been through 3 inflationary periods in the 47 years I have been doing this. I am well aware of what inflation is and what causes it. Perhaps you want to explain this data:

View attachment 997967
What do you make of Buffett selling Apple a couple weeks ago, then a big market drop?
 
What do you make of Buffett selling Apple a couple weeks ago, then a big market drop?

It makes me wonder did he do it because he knew the crash was coming, or did he do it to cause the crash?
 
It makes me wonder did he do it because he knew the crash was coming, or did he do it to cause the crash?
No crash is coming this year. Perhaps in 2025, but not this year. He sold is as further upside above what has already been seen is unlikely to happen for at least this year and probably longer. It was time to start taking profits
 
No crash is coming this year. Perhaps in 2025, but not this year. He sold is as further upside above what has already been seen is unlikely to happen for at least this year and probably longer. It was time to start taking profits

I agree, I was referring to the dip a few weeks ago. Right before it happened Warren Buffett dumped a lot of stock for cash.

If often wonder if it was done due to assuming a dip was coming or if it was done to create one.
 

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