Stock Market Analysis - 4/23/2020 - $SPY $QQQ $IWM $VIX
The last two days of action in the indexes have definitely brought us, once again, to an important crossroads. Yesterday's bearish action broke down the short term uptrend on all major indexes meaning we are now in neutral territory on the short term trend. Now is the time for caution and to see what direction the markets are headed next.
After rolling over on Tuesday, SPY held support a 272 but held below the Anchored VWAP from the gap up two weeks ago that started this recent uptrend. Today's sharp retracement landed just below the falling 5DMA. We also broke that rising wedge pattern I pointed out on Monday. There are definitely signs that SPY is in trouble, but it is not yet clear if we are starting a new downtrend, or just relaxing in the intermediate uptrend. If we break down 272, this is will trigger a confirmed short term downtrend and I will get short some stocks and possibly long VXX. For a bullish case, I would want to see SPY retest the highs, pullback, then take off above the highs at 285.
QQQ broke down the rising wedge pattern from Monday but rejected the Anchored VWAP from the gap up. The current sharp retracement is just under a flat 5DMA. More information is needed to see where QQQ is going although it does seem it's just relaxing in the current intermediate uptrend. Remember, QQQ has not had a real pullback since bouncing from the lows up 30%. If QQQ breaks below 203, this will trigger a confirmed short term downtrend, although be careful of nearby support at the 200.
IWM looks like it is consolidating in a wedge pattern here and is current whipsawing the 5DMA. We shall see what direction IWM wants to go in the near term.
VIX had a nice little spike on Tuesday but ended up fading throughout the day today. The short and intermediate term trend has terminated with a rising 5DMA and flat 20DMA. Again, we shall see where VIX is headed from here.
Overall, if you currently are long, now is the time to tighten up stop losses. In case markets breakdown, you should be protecting those gains. I would not take any new long trades here until markets start to look productive above a rising 5DMA. Now is also a time to look for short ideas to take advantage of a short term downtrend.
After rolling over on Tuesday, SPY held support a 272 but held below the Anchored VWAP from the gap up two weeks ago that started this recent uptrend. Today's sharp retracement landed just below the falling 5DMA. We also broke that rising wedge pattern I pointed out on Monday. There are definitely signs that SPY is in trouble, but it is not yet clear if we are starting a new downtrend, or just relaxing in the intermediate uptrend. If we break down 272, this is will trigger a confirmed short term downtrend and I will get short some stocks and possibly long VXX. For a bullish case, I would want to see SPY retest the highs, pullback, then take off above the highs at 285.
QQQ broke down the rising wedge pattern from Monday but rejected the Anchored VWAP from the gap up. The current sharp retracement is just under a flat 5DMA. More information is needed to see where QQQ is going although it does seem it's just relaxing in the current intermediate uptrend. Remember, QQQ has not had a real pullback since bouncing from the lows up 30%. If QQQ breaks below 203, this will trigger a confirmed short term downtrend, although be careful of nearby support at the 200.
IWM looks like it is consolidating in a wedge pattern here and is current whipsawing the 5DMA. We shall see what direction IWM wants to go in the near term.
VIX had a nice little spike on Tuesday but ended up fading throughout the day today. The short and intermediate term trend has terminated with a rising 5DMA and flat 20DMA. Again, we shall see where VIX is headed from here.
Overall, if you currently are long, now is the time to tighten up stop losses. In case markets breakdown, you should be protecting those gains. I would not take any new long trades here until markets start to look productive above a rising 5DMA. Now is also a time to look for short ideas to take advantage of a short term downtrend.