GREENMARK 101 knows the stock market better than most. That's why we keep a fishhook in our mouth to catch the noise and keep our friends safe. If you haven't "fished" with us, you lost big money. No noise, but a fact-based on what our algothrim projected.
Futures rolled over last night and set for an open at the lower end of yesterday's range. The upward momentum is still intact off the March/April lows for now, but the rally arguably got ahead of itself the last few days.
The Nasdaq has been the strongest with its relative strength throughout the last few weeks playing a major role. Yesterday, its composite gapped up over its down-sloping 50-day moving average to a fresh multi-week high. The next upside target is 9000. Key support on a pullback lies back near the 8000 vicinity. Note the other Majors have lifted with the Nasdaq, but still remain below their respective 50-day sma.
Gold GLD has broken out to a fresh multi-year high this week, lifting the Gold Miners (GDX) with it in the last two weeks. Arguably a "safety bid" in play as investors remain skittish after the recent equity rally with volatility still remaining high (VIX +20). When the VIX stays elevated as it has (currently jumping back up towards 58), most portfolios implement a "risk off" approach. So while prices may be rallying sharply and there's a "fear of missing out" trading attitude, there still remains a lot of technical damage that needs to be fixed before "scared money" comes in off the sidelines with more confidence.
With groups like Gold, Corporate Bonds, Utilities, Staples, and Healthcare being the best performers behind the Technology sector, there are some questions to be asked. (AMZN and WMT both broke out to all time highs, helping the Discretionary XLY sector recover, but they are more of an "online shopping/technology" play given the global lockdowns. Note the CLIX ETF, which is "Long online stores/short (brick n' mortar) stores" has done exceptionally well the last few weeks.
Crude USO has lost its upward momentum from early April as prices retreat back towards its March lows along $19/20, despite the production cut negotiations in the headlines as of late.
The US Dollar UUP appears to be stabilizing in the middle of its wide and loose March range, but is capturing a bid to lift out of its recent pullback.
While Treasury Bonds (TLT, IEF, TIP) remain hesitant in their ranges as of late, while Corporate, High Yield, and Total Bond ETFs are showing more strength with breakouts higher.... AGG, LQD, BND, HYG, JNK. Currently the 10-year Treasury is bid higher for a potential move out of its recent narrowing range.
Prior Notes: Late last week the market's rallied heeded the 50% retracement zone off the Feb high/March lows in the S&P around the 2800-vicinity (approx 8200/8250 for the Nasdaq Composite). It saw as much as a +28% rally off the lows as hopes of a global pandemic is peaking and a shift towards upcoming earnings season unfolds. If buyers continue to maintain the upward momentum, look for the Major Indices to challenge their down-sloping 50-day moving averages this week. Note that the Nasdaq, which had led the rally off the March lows, actually showed signs of lagging last Thursday before the three-day weekend.
For most traders, it's all about two-sided trading, taking advantage of fast moving action on a day to day basis. Sentiment remains extremely negative for coming weeks as a global recession is expected by most. Note the McClellan Oscillator has surged up towards an extreme high over 100 lately, suggesting the rally is stretched.
Support & Resistance Table for Wednesday, April 15, 2020