Week 37 Roundup — Crash, more correction ahead or bull signs?

In my Week 36 market roundup, I mentioned anticipation of a rally in S&P 500 (and need to judge the character of the rally) since there was presence of demand on 4 Sep 2020. The rally came on 9 Sep instead of 8 Sep, which was a day late. Most importantly, the rally is of weak quality and there was no follow through to the upside on Thursday hence drifted lower on Friday.

Despite the weak rally up on 9 Sep 2020, the subsequent reaction on 10–11 Sep 2020 created a slightly higher low (compared to 9 Sep’s session), with slight decreasing of supply, suggested exhaustion of the down momentum. The series of the price action in S&P 500 is also reflected in the falling VIX. The bull has a chance to rally up to test the immediate resistance at 3425.

Is S&P 500 going to crash like what we witnessed during the COVID-19 sell off in March 2020? Judging at the supply level as highlighted in blue in the chart above, it doesn’t seem like it, yet. So far, it is similar to the correction in June 2020.

Are we going to see more correction and weakness ahead? The answer lies on judging the character of the possible rally the bull is having. So, how the price of S&P 500 behave in the trading range for now between 3300–3425 is crucial to determine if there will be a second leg down. If we do get another swing down, previous trading range between 3000–3300 is the obvious target/support and this could be meaningful test of the COVID -19 sell off that a lot of traders have been calling for since March.

Any bull signs for the so far? Apart from the exhaustion of the down momentum, the bull has not had a chance to show off yet. So, I look forward to seeing how the bullish behavior will unfold (if it get a chance with the exhaustion of the down momentum) to judge the subsequent reaction and bias.

Cryptocurrency including Bitcoin and Altcoin showed sign of absorption with decreasing supply suggested a rally ahead. This is constructive sign for the equity markets.

CURRENCYCOM:GOLD and did not react much along with the broad market sell-off. Instead, they are still consolidating in their own structure after the change of character in Aug 2020. Silver is stronger than gold and both are showing re-accumulation bias.

EURUSD touch the level 1.175, which I mentioned in Week 36 and bounced up. As long as it is below 1.19, I still stick to my bearish view with possible distribution in EURUSD. A break below 1.175 will confirm the bearish scenario.

Check out last week market analysis video series below if you haven’t or would like to reflect on how last week unfold together with your preparation and analysis:

Market analysis on 7 Sep 2020 - Demand was spotted in S&P 500 plus how to trade up thrust:

Market analysis on 9 Sep 2020 - S&P 500 - level to watch out for bull:

Market analysis on 10 Sep 2020 - S&P 500 breakout strategy with high winning rate:

Market analysis on 10 Sep 2020 - S&P 500 how to trade trend reversal with high winning rate:

Stock Watchlist — Malaysia
(V.S INDUSTRY BHD) — A change of character kicked in last week and broke the up channel, which should stop the uptrend for now. Trading range between 1.75–2.1 is expected.

(JHM CONSOLIDATION BHD) — Correction together with the market tested the support level at 1.5. Next support is at 1.4 and the immediate resistance at 1.67, 1.77.

(REVENUE GROUP BERHAD) — Tested the support at 1.2. Still within the trading range between 1.2–1.4.

(COMFORT GLOVES BERHAD) — 4 is a key resistance. Failing to overcome this resistance will see more weakness ahead with lower low.

(ADVENTA BHD) — Failing to overcome 2.5 as a key resistance will see more weakness ahead.

(FRONTKEN CORPORATION BHD) — increasing of supply took down FRONTKN to have a shakeout below 3.25. It is still within the trading range between 3.25–3.8.

(FOUNDPAC GROUP BERHAD) — 1.15 is a key resistance while it is still within the trading range between 1–1.2.

(MI TECHNOVATION BERHAD) — A trading range between 3.7–4.4. Supply increases during the reaction. More time is expected to absorb the supply.

Stock Watchlist — US

(MICROSOFT) — Mimic the movement of NASDAQ. In a trading range between 198–217.

(FACEBOOK) — Next support at 260, 250. Likely to consolidate between 250–280.

(Biotechnology ETF) — reaction tested the support at 125. Trading range between 125–136.

(SEA Limited) — stronger than NASDAQ with decreasing supply. Support is at 130. A good rally can be expected when the market is moving up.

(JD.com) — Shortening of the downward thrust with possible trading range between 74–86.

(CLOUDFLARE) — possible sign of weakness (SOW) with distribution quality. If it fails to rally above 36, more weakness could be expected ahead. Next support at 30.

NASDAQ:LVGO (LIVONGO HEALTH) — Trading range between 111–150.

(PELOTON) — While the market was having a reaction last week, PTON created an up thrust action, failed to stay above the previous high with spike of supply. Immediate support is at 70. Consolidation is expected if it can stay above 70.

(Alibaba Group Holdings) — holding up nicely above the support at 267. Expect a rally to test 290 if the market is moving up.

(B2GOLD CORP) — trading range between 6–6.8.

(FASTLY INC) — tested the support at 74 again with decreasing supply. Expect a rally to test 90 if the market is moving up.

(SQUARE INC) — tested the support at 135 again with decreasing supply. Expect a rally to test 158 if the market is moving up.

Study their charts and you should find them interesting in terms of price structure and volume signature.

Disclaimer: The information in this presentation is solely for educational purpose and should not be taken as investment advice.