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Technical Analysis

DOW JONES - First Resistance Reached

by Antonis Benis, on Apr 30, 2020 4:27:01 PM

Last time I visited the US stock markets was on March 12th. Stocks sold off for another 7 trading days before finding strong support, the lower level I had given for the S&P 500 worked exactly, Dow Jones had one more daily lower close.

For now, the worst of the sell off appears to be over and the stock markets appear to stage a V- shaped recovery; however, the economic and personal consequences due to the pandemic and the state response to it (lockdown) should stay with us for a long time. I do expect one more dip in the stock markets before this is all over.


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Daily VIX for the S&P (volatility index, moves opposite to the S&P) cycles suggest a low (top for the S&P) around now (see chart 1)

VIX cycles for the S&P 500 volatility index moves opposite to the S&P

Weekly VIX cycles suggest a low for the VIX around the end of June (see chart 2)

VIX cycles weekly chart for end of June 2020

Dow Jones and other stock indices had registered a TD daily sequential 9 sell setup on April 17th, corrected for a couple days. Current sequential count at 5.

NYSE Advance/Decline line is strong, confirming the recent highs; no divergence there (see chart 3)

NYSE Advance- Decline line

Courtesy of sentimentrader.com

Smart/dump money confidence is gradually closing the gap; however still not at levels that would point to a major reversal (see chart 4)

Smart money - Dump money confidence

Courtesy of sentimentrader.com


GANN ANALYSIS

Resistance levels at: 24770/24868 (reached earlier on April 30th, correcting), 25856/25998, 27092/27129, 28162/28259 (see chart 5)

DOW 30 daily - GANN Analysis

I am confident with the levels, not that much with the angles (time)


Conclusion

Stock markets have reached the first of the resistance levels amid strong optimism and correcting hard now. The outcome is yet to be seen; for now, I tend to believe that we have only seen a temporary high.


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Topic:Trading SignalsAsset AllocationS&P 500Analysis and StrategyUS Stock MarketNYSEVolatilityRecessionCovid-19
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