3/22/2018 Review of Indexes and Key Levels to Look Out For

Fun Fact #7 

Did you know that QQQ, SPY, and DIA options are taxed at the 60% long term tax rate, and 40% short term tax rate regardless of the time you hold those options for?


 

Unless something drastic happens in the stock market or a certain key level is hit, I will only review the indexes in-depth at the end of each week (on Friday or Saturday). 

During the weekdays, I will have an in-depth look at individual stocks that I think you should consider buying or selling. I will also be changing the menu at the top of the blog as well as adding some other neat features (soon). 

Levels to watch for in the FAANG stocks (these are the next support levels):

FB: 160-163

AAPL: 162-165

AMZN: 1430-1475

NFLX: 280-290

GOOG: 980-1020


 

It turns out today is a worthy day to have a discussion on the major indexes, so I will be reviewing QQQ, DIA, and SPY like normal.

What surprised me today is how the market reacted to the tariff announcements. My thought was that the news should have already been priced in, since everyone knew that Trump was going to be making that tariff announcement today. Right at market open, the market gapped down about 1% and stayed down for most of the day. Today’s price action makes me bearish for the next two weeks (from neutral/slightly bullish), although I think we are overdue for an upward bounce in the next 1-3 days. 

Perhaps short selling into strength now would be a good idea if you think the market is topping out. You could also consider trimming your long positions and/or buy puts since these market conditions are very choppy and unfavorable for trading. 

I think the market indexes (at least SPY and DIA) are bound to test the February lows. Look at the charts below. 


QQQ analysis 3_22_2018.PNG

Although QQQ is still very strong relative to the SPY and DIA, generally the indexes move together, so maybe QQQ will also drop and test the 150-155 zone. But who knows, the markets are irrational and don’t follow logic, otherwise everyone would be rich right?

 

DIA is still the weakest of the indexes. Dow plunged 700 points today largely because the tariffs affect the steel and aluminium industry the most (think Caterpillar and Boeing).  

DIA analysis 3_22_2018.PNG

Notice that Dow Jones failed to make a higher high between late February and early March. I highlight that in the slanted black line above. This failure to make a higher high displays that Dow Jones is really weak. Now we have broken through the minor support zone between 242.5 and 247.5. It looks almost inevitable to drop to the 230-235 support zone now. That’s a downside of another 4-9 points which represents another 400-900 points down on the Dow Jones Industrial Average. 

 

SPY analysis 3_22_2018.PNG

The SPY is also testing a minor support level, but will probably fail to hold. My guess is since these sell-offs are extremely violent, we will see the SPY fall into the 252.5-257.5 zone in the next week. 

I will be adding some new visually appealing features and a menu for my posts so you can navigate around this site more easily. 

Good luck traders!

 

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