I have a very busy weekend since my family just got to Boston.
I will outline some things to think about for the coming week(s).
The stock market is at a level where we could violently break down and drop 5%+ in a week. However, we are also nearing a strong support level where we could bounce 5%+ in a week. I know that doesn’t help you much, but remember that I still favor a move down. Perhaps it’s more likely we move up in the next week or two, but if we look at the longer term (more than just 2 weeks), it seems quite possible that this is a trend reversal, and we will likely go much lower.
In the weekly chart of QQQ above, I’ve highlighted some tradable levels. You can buy in the 160-165 support zone, and sell or go short in the 175-180 resistance zone. Have a great Thanksgiving! I’ll see you all sometime next week.
Hi everyone. Last week I favored a move down, but mentioned that if we do move up again, I think we will have a follow through week or two. I still think the top is in, and that we are in the middle of a bear market.
Above is the weekly chart of QQQ.
Above is the weekly chart of MU. MU has bounced back up to the 40 level, which is now acting as resistance. It seems like we will retest 35 again.
Today’s post was short because I’ve been spending 4 hours a day on my business plan and recipe testing, so yeah. And school is getting busy before Thanksgiving break so… I’ll see you all next week!
The markets bounced this week, and are now hitting some resistance. I still favor a big move lower in the next 3-4 weeks.
The weekly chart of QQQ has a hammer, and this is considered bullish. I will flip bullish from bearish if we close up next week. At the minimum, I expect we will test the 160 low before moving higher if we do continue to make new highs.
Chinese stocks also had a strong bounce this week on heavy volume. This is a very good sign for bulls. I still favor another leg lower, but if we close up next week, I don’t think that will be the case anymore.
Hi everyone. I hope you have been able to survive this super volatile week. Let’s begin our discussion with MU.
Above is the weekly chart of MU. We’ve officially sliced through the support in the 38-40 range, and now are looking to test the support level labeled “Support 1” above. I think there’s a good chance we work our way down to “Support 2,” so I’m looking to buy and hold for 2+ years in the high 15-20 dollar range.
On the weekly chart of QQQ, we have definitely broken through trendline support now if we didn’t last week. The high volume selling confirms the significance of this trendline. As a result, I think we will see the 150-155 range tested in the next 3-4 weeks.
Here’s the daily chart of QQQ. I will point out all the negatives first, then note one strong positive sign. The main point is that this dip is different. Our momentum indicators, RSI and MACD, have reached the lowest levels in multiple years. Notice that the previous dips never had the RSI go below 30, and the MACD looked a bit healthier too. We are also sitting under the 200 day SMA for the first time in a long time.
The positive sign is the bullish divergence. Notice that the RSI made a higher high while price made a lower low. Unfortunately, we don’t see any bullish divergences on the weekly chart. That is why I’m favoring that we test the 150-155 zone in the next 3-4 weeks since the weekly chart is more significant than the daily chart. A drop to the 150-155 zone would be a drop of another 6.5-10%. Maybe I’m just too pessimistic, and we are due for a bounce. We have been dropping a lot lately so who knows.
Please join me next week to see what I think!
Hi everyone, I hope you all had a great week.
Above is QQQ on the daily chart. Notice that this is the first time it’s had an RSI reading clearly below 30 in the last 2 years. That represents the possibility of a long-term trend reversal which I’m still favoring. Either way, if you have cash, now would be the time to consider buying a little.
On the weekly timeframe, QQQ has broken down from a 2-year uptrend line on high volume. This trend line break is following an RSI divergence, meaning the index made higher highs, but the RSI indicator did not. I think we could see the low 160s or high 150s in the next 2 months.
Last week we discussed MU on the monthly chart and noted that it looks like it will retest the high 20s or low 30s. MU is currently testing a key support level at 40 and would be a good place to buy for a quick bounce as well as a long-term hold. I’m still avoiding MU because I believe it will go much lower in the next 6 months.
Above is MU on the weekly chart. MU is trying to hold onto a key support level here. If we see impulsive selling in the next few weeks, this will confirm the new downtrend.
Here’s the weekly chart of BABA. Although I don’t think we’ve found a bottom yet, buying shares now and in the 110-120 range seem like good choices for long-term investors.
Facebook (FB) looks like a great purchase here in the 150s for the long-term investor.
Here’s the SSEC, which is the Shanghai Index. The index has broken through a key support zone but also has bullish RSI divergence. Notice how the price has made lower lows, but the RSI indicator has made higher lows. This suggests we are forming a bottom here. Generally, global markets are correlated, so if one market starts recovering, other markets will follow.
I hope to see you all next week!
Hi everyone, welcome back.
Let’s take a look at QQQ, BABA, MU, and then discuss what I think will happen in the next week and onwards.
QQQ broke through the 175 to 177.5 support level last week. It looks like we should avoid taking any trades here, and look to buy near the most recent low (169-171 ish) or short sell in the 177.5 to 180 level. I believe there’s a higher chance we move up first, and then drop to retest the high 160s. Overall, the market looks very damaged, and I expect a lot more downside in the coming 3-6 months.
Daily chart of BABA above.
I think that BABA is beginning a new downtrend. I believe it would be smart to buy here if you plan to hold for at least 1 year, but waiting until a retest of the lows at 135 would also make sense. The short-term direction is unclear, but my gut says we move lower next week.
Here’s the monthly chart of MU. Notice how we’ve broken the uptrend line, and the next area of support is between ~26 and 38. If we drop like we did in 2015, we will be retesting the mid-20s (bottom of rectangle above). I am not buying here as I believe we have begun a new downtrend and will hit at least the low 30s.
Facebook has reached my add-on target of 150, so I think it would be a good idea for long-term holders to add here. The next level to buy at is 115-125.
In the last two weeks, I suggested that we would see QQQ retest the previous all-time high, and then drop from there. It seems like I was right for once.
Anyways, although I favor a small move upwards in the next few days, I ultimately see the indexes moving lower in the next 2 weeks. I suspect QQQ will touch 175 by Friday the 19th (highlighted in the rectangle below).
Above is the weekly chart of Facebook (FB). I purchased some shares for my Roth IRA back in late July after it dropped 20% in one day. I bought around 175 and plan to buy more near 150. The support levels highlighted by the rectangles above are where I plan to buy more shares.
From a technical perspective, the chart looks ugly. Facebook has broken down from a 3-year uptrend line (highlighted by the diagonal line above) and has negative RSI divergence on the weekly chart. Price made a new high, but the RSI indicator did not. I plan to hold this stock for 2-5 years, with a selling price target between 215-300 depending on my mood.
We will look at BABA and MU next week, but they are dropping and will likely continue to drop.
A stock that I am considering buying for the long-term hold (2+ years) is WB.
Here’s the weekly chart of WB. I did some short-term trades on this 6 months ago which didn’t go too well. Anyways, WB peaked in early 2018 at about 140, and is now less than half that price. There is no doubt that this stock is cheap when compared to where it was before. However, cheap stocks generally get cheaper, so you may want to buy some shares in the next support level (40-50), and then at the 2014 IPO price of 20. My price target is at least the previous all-time high at 140. If you buy at an average price of 35, you have a risk reward of at least 4 (35 x 4 = 140) even if the company went bankrupt. Seems like a bargain to me.
I look forward to blogging for you all next week! See you then.