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Technical Analysis

U.S. Stock Market Levels

by Antonis Benis, on Oct 5, 2020 4:12:28 PM

Last time I analyzed the US stock markets was on September 15th. Since then, the stock markets had one more hard decline followed by a rally that started on September 24th and is still in progress. There are currently conflicting messages from the market action, i.e. the very important Advance/decline line (see chart 1) is suddenly showing bullish signs, while at the same time cycles, Gann analysis and sentiment indicators suggest that a lasting bottom is not yet in.

NYSE Advance- Decline line Sept. 2, 2020

Courtesy of Sentimentrader


Cycles for the S&P 500 suggest a decline into the middle of October, followed by a rally and renewed weakness into the first week of November (see chart 2).

SPX trading cycles Sept. 2, 2020

Sequential sell setup for DOW 30 (spot) at 7 today (out of possible 9).


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Gann Analysis

Gann analysis NASDAQ 100 (spot): the 30x1 daily Gann angle is a weak, interim one; it provided support on September 21st through 24th  that set the base for the ongoing rally. Any break through this angle, would serve as the catalyst for a selloff that should find support at the very strong/important 20x1 daily Gann angle. If the level is right (9741/9774), the date should be October 16th (see chart 3).

Nasdaq 100 - Sept. 2, 2020


RUSSELL 2000

This index has taken recently the lead and is outperforming the other indexes, it is a mystery for me. However, it has found support at a minor, interim Gann angle (the 5x2 calendar); any break through this angle should be followed by a selloff that should find support at the very strong 2x1 c angle. If the level (1375) is right, the date would be October 14th  (see chart 4).

RUSSELL 2000 - Sept. 2, 2020 trading signals

For both, Nasdaq 100 and Russell 2000, the patterns are textbook Gann; it is very rare that they fail, however these are not normal markets.


Conclusion

This kind of markets are especially difficult to predict/trade; they are driven mostly by the news, market interventions by central bankers and emotions. If the markets are poised to reach the levels mentioned above, they should finish the current rally in the next 1-2 days, at the latest and start the second leg of the correction that should be equal or stronger than the first one. Any trade above the October 1st high for the Nasdaq 100, negates the Gann analysis; something else is going on.


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Topic:Active TradingS&P 500Russel 2000Gann AngleUS Stock MarketCovid-19Daily Trading Update
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