Hi everyone, welcome back. Stocks didn’t move much this week, so we will look at SPY and QQQ and then call it a day.
Last week I thought we would continue moving higher until something more drastic changed. I think the charts are telling us that the character has shifted from being near-term bullish to near term bearish.
Over the last month, SPY would normally close the week strong, but we got 2 consecutive down days to close the week this time. A large part of this downmove is due to the weakness in the technology sector. There’s also the bearish RSI divergence, hinting that the upward momentum is weakening.
SPY daily chart below, notice the bearish RSI divergence (higher high, but lower RSI reading).
QQQ (tech heavy ETF) daily chart below:
I think we will move to the high 230s rather quickly before we get a strong reaction. The move would put QQQ roughly 6% lower. However, notice how the last 2 times QQQ reached an RSI near 50, it recovered. I suspect this time will be different, but we will see.
Enjoy the rest of your weekend, and I will see you next weekend like usual!