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Today's Trackdown: Monday - Feb. 1, 2021

SPY Charts and some Technical Analysis

News to keep in mind Today - Today's Economic Calendar - The Charts - Opinion - Stock Picks.


News to keep in mind Monday morning:

  • Futures trade vs fair value were trading slightly higher late last night. -- Trading is a bit irrational and wacky right now, use caution! --
    • Dow +83, S&P +12, Nasdaq +40, Russell +7. (2:10 am ET).
  • We look good technically - But use "Caution" message has been on here for a while for a reason. (Quick sell-offs and/or getting overbought are a possibility at anytime - so we continue to leave this note).
  • The biggest factors in the market right now are; Coronavirus headlines, the US economy, the Global Economy, any political drama.
  • Watch the VIX - (CBOE Volatility Index) - Sudden huge spike! If this stays high the markets will be a bit rocky. It would be expected that the market recovers eventually and quiets down some then the Vix will drift back down.

Today's Economic Calendar:

10:00 AM ET, ISM Manufacturing Index for January. The consensus is for the ISM to be at 60.0, down from 60.7 in December.

10:00 AM, Construction Spending for December. The consensus is for a 0.9% increase in construction spending.

2:00 PM, Senior Loan Officer Opinion Survey on Bank Lending Practices for January.

THE CHARTS:

(NOTE: Charts are a good guide, but when a tweet or news item can jerk the markets around, they mean a bit less.)

BRIEFING:

We had a big hit to the markets on Friday as some hedge funds were 'forced' to sell some stocks as many short positions were being margin called, etc. Due to the decline, we had some negative changes to our indicators. The Money Flow due to the selling and high volume has gone negative. The only slight positive about the recent action is we are still just above the 50-day moving average and above our strong support/stop of SPY 365. Watch the 50-day as we are barely holding above it.

From here there maybe some volatility for awhile, but we would suspect at some point the market will recover and resume the previous uptrend. If you look below at the dips on the 8-month chart we had in late September and in late October, we broke below the long-term trend line but did recover and resume back within the lines. However, don't blindly assume this will be the case, prepare for other possibilities as well.

Use caution right now and keep a level head. Is this going to be a correction or just another dip to buy? It is to early to tell.

On the longer term 8-month chart, we remain inside the dominant longer term uptrend.

** - Repeating - Are we going to be near a top or up against resistance someday? How long can this uptrend continue?

Note: The Russell 2000 (small caps) are definitely leading the markets so far this year. Their positive uptrend is still intact.


"The possibility of a consolidation, sideways market, or pullback of some kind may happen at some point." But not necessarily. Positive momentum and easy money can keep driving us to new highs.

IF wanting to gamble: Options trades on these ETFs will give you a way to place your bets. $TQQQ - $SQQQ - $SPXL - $SPXS.

* Beware - levered ETFs are subject to decay and are not for long-term holding. *


CHANGES:

  • The Money Flow has gone negative.

POSITIVES:

  • The MACD is positive.
  • We are over the 50-day moving average, which is rising.
  • We are over the 200-day moving average, which is rising.

NEGATIVES:

  • We are under the 20-day moving average.
  • The MACD and the Money Flow are declining.
  • The Money Flow is negative.
  • Possible market top?
  • * Note: The 50-day moving average has gotten way ahead of the 200-day. This can be an overbought issue.
  • What about the Fundamentals, Valuations, Virus news, the Economy, Jobs, Election issues, Politics, The FED, etc.?
  • Some things out there to worry about still! Or a wall of worry to climb as the saying goes.


OPINION:

  • Currently we are above the 50-day and 200-day MAs. (Bullish).
  • But.. below the shorter term 20-day MA. (Short-term Bearish).
  • The Money Flow has gone negative.

  • The possibility of settling into a trading range for a while is a good possibility.
  • The bottom line being the SPY 365 strong support level and the top maybe 380ish.

  • We still say "Use Caution" for a reason. Do not over risk yourself or over leverage yourself.
  • We are still susceptible to large drops or dips.
  • Look for trading opportunities that could result and have your trading lists ready.

* Be careful if using MARGIN at this time, be certain of your trade! *

INDICATORS:

The MACD is positive/declining. The Stochastics are neutral. The Money Flow is negative/declining.

MA +/- (slope): The 50-day MA (370.12)(+0.18) and the 200-day MA (332.22)(+0.48)

The 8-month chart (below).

We are above the SPY 365 support level.

The market has been in an impressive up-channel since June. Technically still looking well.


STOCKS: < Favorites & Trade Ideas > <-- Click here for the quotes, details, news and opinions on our current Favorites and Trade Ideas!

  • Current trading favorites: $AUPH - Aurinia Pharma (Their Lupus drug has been FDA approved), $EPZM - Epizyme, $EXEL - Exelixis, $HZNP - Horizon Therapeutics (A big winner for us last year), $IOVA - Iovance, $KPTI - Karyopharm, $SGMO - Sangamo, $TGTX - TG Therapeutics (Our Top Pick!).
  • Tech Picks: $CRWD - CrowdStrike (Although be aware it has a high valuation now).
  • Also watching: $OMER, $SRNE, $TRIL, $VKTX.

* Feel free to share your list/picks in the comments below.


Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.


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