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Weekly S&P 500 Charts - 4/19/2020 Issue 14 by TradesAfterWork

Via -TradesAfterWork
4/19/2020 Issue 14

Posting this to share with our readers: (We really like these Weekly Technical Briefs by TaW).
The weekly chart of the S&P 500 Index below is showing that the bulls continue to make strides in the market. The 10 Week/50 Day SMA was broken through to the upside at the close of last week, so the price of the S&P 500 Index is now above this moving average. Obviously that is very good and is evidence of the market repairing the damage from those March 23 lows. This means the bulls are still in control, but there is still some additional work to be done. As you look at the chart one area would be the Relative Strength Index (RSI). I would like to see that above 50% as another confirmation to this trend being cemented. Also, Stochastics are still below 50% and the Moving Average Convergence Divergence (MACD) is negative and below the zero line. Additionally the 10 Week/50 Day SMA is still crossed below the 40 Week/200 Day SMA. We have to work with what we have though, and that is the prices of the S&P 500 Index are going up so we must ride along with the upward trend.
I wanted you to see the contrast of the S&P 500 with the leading index, the Nasdaq Composite. In this case you can see that, not only has the Nasdaq Composite breached it's 10 Week/50 Day SMA, but it has also broken above its 40 Weeks/200 Day SMA at the end of the weeks close. That is huge! It is that 40 Weeks SMA that is the clue to what the longer term trend of a stock, index or market is. What else do we have to confirm this move? Look at the RSI above 50%. The MACD, although negative and below the zero line, Is increasing in momentum. The Stochastics is not yet above 50%, but looks better than the S&P 500 Indexes Stochastics. What is so powerful about the weekly chart is that it shows whether the current short term trend rally is working on getting the same action on a intermediate term trend basis. This chart shows we are not quite there yet. As you look at the chart you can also see that the two moving averages are trying to converge which is also a good sign. There no question that the Nasdaq Composite is healthier than the S&P 500 Index or the New York Stock Exchange.
One of our Stock/ETF/Index picks that we hold in our portfolio is QQQ. This ETF tracks the Nasdaq 100 and is a reflection of the Nasdaq Composite's strength. This ETF is made up of the 100 largest companies on the Nasdaq Composite that are non-financial, meaning technology stocks.
The QQQ is showing prices breaking above the 10 Week/50 Day SMA and 40 Week/200 Day SMA. The RSI is sitting at 56.05%, which is what you want to see. The MACD is closing in on positive and above the zero line. Stochastics is also heading the right direction. The QQQ appear to be one of the major players in this new rally, and is one place to put a heavier weighting to as you continue to build your portfolio.
Last week we saw the chart of the NYSE Bullish Percentage Index in a column of X's up against bearish resistance or where sellers have been in the past. I said "The chart below is showing that we are nearing 70%, which would mean that 70% of point & figure charts are giving buy signals. That would also mean that perhaps we are getting a little rich, so we may find some sellers in the market before we can breach that 70% level. We will get a chance to see this week." This past week with all the volatility in the market this risk indicator flipped back to row of O's or Supply (sellers) in the market. That is incredible!
You may be wondering what this risk indicator is telling us besides the fact that we have sellers in the NYSE? It's not untypical for the NYSE Bullish Percentage Index to begin to wain or turn down when it gets near the 70% on its chart. 70% and above is considered to be overbought and the Index came very close to that. Remember 70% on the NYSE Bullish Percent Index means that 70% of all Point & Figure Charts are giving a buy signal. When demand in stocks gets that high it is often challenging to find new buyers because most people are already in the market. What I think is interesting is that, while the NYSE Bullish Percent Index is showing supply and in a column of O's, both the Nasdaq Composite Index and QQQ are in a column of X's (demand) in their Bullish Percent Charts. This clue is another piece of the puzzle to help in understanding what is going on underneath the hood of these markets.
If I can be of any assistance please don't hesitate to contact me. Take Care!

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The Subscribers’ Special Report (SSR) is a publication It should not be regarded as a complete analysis of the subjects discussed nor should the SSR be construed as personalized investment advice. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.© 2020 All rights reserved. Intended for receipt only and not for further distribution without the consent of

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