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Today's Trackdown: Monday - Jan. 27, 2020

  • Brief Recap and Updates on the Markets
  • SPY Charts and some Technical Analysis

In Friday's action:    Jan. 24, 2020

Dow 28989.64 -170.36 (-0.58%)
Nasdaq 9314.93 -87.57 (-0.93%)
SP 500 3295.47 -30.07 (-0.90%)

The S&P 500 lost 30 points on Friday in a steady decline from opening levels as risk was dampened by the coronavirus headlines. Good news for the day: Intel ($INTC 68.47, +5.15, +8.1%) and American Express ($AXP 135.11, +3.74, +2.9%) were higher after reporting with good earnings and guidance numbers.


News to keep in mind Monday morning:

  • Futures trade vs fair value were trading LOWER late last night. Coronavirus fears and headlines.
  • Dow -248, S&P -30, Nasdaq -119, Russell -13.
  • 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 may go a bit higher on fears.
  • CHINA TRADE news is still something to be aware of and can create instant volatility.

Today's Economic Calendar:

10:00 AM ET, New Home Sales for December from the Census Bureau. The consensus is for 730 thousand SAAR, up from 719 thousand in November.

10:30 AM, Dallas Fed Survey of Manufacturing Activity 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.)

The markets ended lower on Friday on virus fears and traders not wanting to hold stocks over the weekend. On the day, a 'Bearish Engulfing' candle was formed. This sometimes marks a short-term top or change in trend.With the futures for Monday's open tanking, it appears this will be correct. With a lower opening the MACD and Money Flow may go negative. We still favor stocks longer term, so we will be looking for opportunities to act on stocks that get over sold on any market pullback or panic.

On the 9-month chart, we are still well above the uptrend line. This will keep us cautious.

Our support levels remain the same, with the first support level being marked at 320. This level could also be used as a 'stop' for some positions if you have a low risk tolerance. Much stronger support is at 310.

 The Friday closing price is above the 20, 50, and 200 moving averages. This is good and bullish, but it is looking like the 20 will be broken down for sure and the 50-day MA could be at risk. Keep an eye on the 50-day MA as it is used by many.

Keep in mind we would not use excessive margin or open any new large positions currently. 

The Vix will need to be watched more closely. Will it spike on pullback/virus fears?

The MACD is positive. The Stochastics are high/neutral. The Money Flow is positive. We are above the 50-day MA. The 20,50,200 day moving averages are in a positive alignment and heading higher.

The 50-day MA (318.37)(+0.44) and the 200-day MA (297.56)(+0.23)

On the 9-month chart below, we remain in an uptrend channel that has lasted now for about 8 months! Caution though as we are currently above the upper trend line, which is an overbought look. In many cases we drop back down into the channel either by a pullback or by going sideways until the upper trend line catches up.

* For those who like to use stops or lock in profits, we would use the upper trend line as the place to do that, currently just above 322. *

  • Nasdaq Composite +3.8% YTD
  • S&P 500 +2.0% YTD
  • Dow Jones Industrial Average +1.6% YTD
  • Russell 2000 -0.4% YTD

$DIA $SPY $QQQ $IWM

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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