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Today's Trackdown: Wednesday - Feb. 5, 2020

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

In Tuesday's action:    Feb. 4, 2020

Dow 28807.54 +407.82 (1.44%)
Nasdaq 9467.99 +194.57 (2.10%)
SP 500 3297.59 +48.67 (1.50%)

The stock markets rally in a risk-on trade environment with the Nasdaq closing at a new high. Also China injected more liquidity into the market and reportedly plans more stimulus measures.


News to keep in mind Wednesday morning:

  • Futures trade vs fair value were trading a bit lower late last night.
  • Dow -8, S&P -2, Nasdaq -4, Russell +1.
  • 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 has not really spiked, still neutral/risk-on.
  • CHINA TRADE news is still something to be aware of and can create instant volatility.

Today's Economic Calendar:

7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM, The ADP Employment Report for January. This report is for private payrolls only (no government). The consensus is for 159,000 payroll jobs added in January, down from 202,000 added in December.

8:30 AM, Trade Balance report for December from the Census Bureau. The consensus is the trade deficit to be $48.0 billion.  The U.S. trade deficit was at $43.1 billion in November.

10:00 AM, the ISM non-Manufacturing Index 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 much higher on Tuesday as dip buying ruled the day. We will keep using caution though. However, we still think the dips should be bought, unless the cornavirus really gets out of control. Good news for bulls is that the 50-day moving average had held up and we have regained the 20-day moving average.

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

Still using some caution:  * Keep in mind - we would not use excessive margin or open any new large positions currently. *

We are above the 20-day, 50-day, and 200-day moving averages. These 3 MAs are also in the proper alignment and headed in an upward direction. This is bullish. Currently the 50-day MA is at 320.69, this level must hold or additional weakness and technical damage to the charts maybe done.

The Vix will need to be watched a bit more closely. It did spike a bit on virus fears initially, but is still in the teens. This is a neutral/risk-on level.

The MACD is positive. The Stochastics are neutral. The Money Flow is a slight negative now. We are above the 50-day MA.

The 50-day MA (320.69)(+0.39) and the 200-day MA (298.97)(+0.21)

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 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 last support line around 320. *

  • Nasdaq Composite +5.5% YTD
  • S&P 500 +2.1% YTD
  • Dow Jones Industrial Average +0.9% YTD
  • Russell 2000 -0.7% 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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