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Today's Trackdown: Monday - Feb. 3, 2020

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

In Friday's action:    Jan. 31, 2020

Dow 28255.94 -603.41 (-2.09%)
Nasdaq 9150.95 -148.00 (-1.59%)
SP 500 3225.52 -58.14 (-1.77%)

The stock markets sold off to end the week/month, on growing fears about the coronavirus and the negative effects it could have on economic growth and the global economy.


News to keep in mind Monday morning:

  • Futures trade vs fair value were trading a bit higher late last night. Trying to rebound?
  • Dow +177, S&P +20, Nasdaq +73, Russell +12.
  • 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:

10:00 AM: ISM Manufacturing Index for January. The consensus is for the ISM to be at 48.5, up from 47.2 in December.

10:00 AM: Construction Spending for December. The consensus is for a 0.5% 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.)

The markets ended much lower on Friday as virus fears plagued the markets. Also traders are not wanting to hold over the weekend in some cases. The charts look a bit more bearish, so we are still using caution. However, we still think the dips should be bought, unless this virus really does some damage.

* The charts mean a bit less currently as the coronairus news in the headlines sparks fear and selling fits. *

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

We are above the 50-day and 200-day moving averages, but below the 20-day now. Currently the 50-day MA is at 320.02, 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/declining. The Stochastics are neutral. The Money Flow is neutral. We are above the 50-day MA.

The 50-day MA (320.02)(+0.22) and the 200-day MA (298.56)(+0.18)

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 at 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 upper trend line as the place to do that, currently just above 322. *

  • Nasdaq Composite +2.0% YTD
  • S&P 500 -0.2% YTD
  • Dow Jones Industrial Average -1.0% YTD
  • Russell 2000 -3.3% 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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