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Today's Trackdown: Thursday - Feb. 27, 2020

  • SPY Charts and some Technical Analysis

Recap of the previous market day....  (click here)....   Dow -123.77 at 26957.51, Nasdaq +15.16 at 8980.81, S&P -11.82 at 3116.39


News to keep in mind Thursday morning:

  • Futures trade vs fair value were trading lower late last night. We got a US virus case and a earnings warning from Microsoft. $MSFT.
  • Dow -375, S&P -46, Nasdaq -143, Russell -24.
  • The biggest factors in the market right now are; Coronavirus headlines, the Fed, the Global Economy and Global Geopolitical conflicts.
  • Keeping an eye on the VIX - the CBOE Volatility Index is spiking due to virus fear and fear of economic fallout due to the virus.

Today's Economic Calendar:

8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 211 thousand initial claims, up from 210 thousand the previous week.

8:30 AM, Gross Domestic Product, 4th quarter 2019 (Second estimate). The consensus is that real GDP increased 2.1% annualized in Q4, unchanged from the advance estimate.

8:30 AM, Durable Goods Orders for January from the Census Bureau. The consensus is for a 1.5% decrease in durable goods orders.

11:00 AM, the Kansas City Fed manufacturing survey for February. This is the last of regional manufacturing surveys for February.


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.)

* The charts mean a bit less currently as the Coronavirus news is in the headlines and can spark fears. *

* Due to the virus and the fears/headlines charts may only really show what possible support levels might be. *

The markets were mostly lower again on Wednesday, which caused even more damage to the charts. The Money Flow has taken a nose dive after the high volume selloff we have had the last 3 days. Under normal circumstances we would say the Money Flow is way oversold. Also the Stochastics are oversold. We are under the 50-day moving average, which we don't like from the technical standpoint.

CHANGES:

  • The Money Flow has turned even more negative after heavy selling. Oversold.
  • The Stochastics are now oversold.
  • We have broken below our support level of 312 from the chart.
  • We are well below the 50-day moving average now.
  • The 20-day and 50-day moving averages are declining.

POSITIVES:

  • We are above the 200-day moving average.
  • All 3 MAs are also in the proper alignment.
  • We usually would be considered way oversold here.

NEGATIVES:

  • The MACD is declining.
  • The Money Flow is very negative.
  • We are under the 50-day moving average.
  • The 50-day moving average is declining.
  • Not a technical indicator - Coronavirus fears and uncertainty are beating us around and causing fear/volatility.

OPINION:

  • Longer-term bullish. Shorter-term using some caution, maybe defensive. We are susceptible to large pullbacks or dips and may see increased volatility.
  • We will keep using some caution as the Coronavirus is not cured and continues to spark fears about an economic slowdown. We would still buy the dips in stocks we like that become way oversold. (To cheap to pass up).
  • The  U.S. economy was still doing well, have to keep an eye on how the virus might slow it down and how much.
  • After any big sell-offs or dips - look for names that are oversold to buy.

Using some caution:  * Meaning - we would not use margin at this time. *

VIX:   Spikes on virus fears! Expect possible price swings.

INDICATORS:   The MACD is declining. The Stochastics are oversold. The Money Flow is very negative/oversold.

MA +/-:   The 50-day MA (326.68)(-0.08) and the 200-day MA (302.30)(+0.13)

On the 9-month chart below, we were looking at a rising wedge pattern, but that pattern was broken to the downside. We now don't have any real patterns to point out. We have a top/resistance line and then a support line at 310, followed by another line at 305.

Continue to use caution as we deal with the breaking down of the previous chart pattern. The next level of support is marked at 310 on this chart. With the wedge being broken, a new pattern of some kind may emerge soon.

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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