Chart Observations for (next) Week 23
I do not intend to predict what will happen next week in the markets. I do want to assess the probabilities of what “could” happen and what is likelier to happen. I covered the trending of the markets after last week’s big moves up. The trending is decidedly bullish, and the bullishness is catching up with the broader markets as opposed to just the top 10 tech stocks.
SPY: The price closed the overhead gap at 425.5 which was unfilled since August 2022. However, the big move up did create a new unfilled gap at 422.92 which is -1.17% below current level. The price was up +2.41% over the last 2 trading days. So, it is conceivable that it gives back a little before continuing to move up. The RSI and Bollinger bands are suggesting somewhat overbought levels. There is also some resistance at around the 429/430 mark (current price is 427.92). So, a small pullback seems possible, but I do not see that as the end of this bull run. In fact, the RSP was up greater than the SPY over the last 2 trading days indicating a broader base of upward moving stocks. The RSP is the equal weight of the S&P 500 whereas the SPY is weighted by dominance of the bigger stocks.
RSP: The price gapped up Friday leaving an unfilled gap below at 141.11 which is -1.82% below current level. The price is not yet trending bullish per my system. However, it moved above both the 50-day and the 200-day plus the 50-day is just about to cross the 200-day moving average. So, it is well positioned. I still like trading the SPY instead of the RSP due to the volumes of trading in the SPY. But knowing the RSP is starting to do well gives more confidence on the SPY as well.
QQQ: The price remains overbought by traditional methods. But there does not seem to be anything that can stop the run. There is an unfilled gap above at 359.93 which is +1.49% above current level. There are also unfilled gaps below the first of which is at 332.91 (that is -6.13% below current level). I do think with the current momentum it takes out the unfilled gap above first. Beyond the unfilled gap above there is some resistance around the 370 level.
DIA: The price gapped up and left an unfilled gap below at 331.98 which is -1.80% below current level. There is also an overhead unfilled gap at 340.26 which is +0.65% from current level. Note that DIA is still not trending bullish, but a couple of up days can get it there.
IWM: Price gapped up and closed +3.63% just on Friday. The 2-day move has been +4.75% which is indeed a big jump. It will be surprising of the price does not give back something at least intraday on Monday. There was a gap above at 181.28 which is now closed. The unfilled gap below is at 176.24 which is -3.18% below current level.
KRE: The price is trending short-term bullish and also above the 50-day moving average now. The last 2 trading days it was up +7.68%. It is getting close to a level where it has to contend with potentially some overhead selling pressure.
KWEB: The price is trending bearish but is coming off a big move over the last 2 trading days. It is up +7.49% in 2 days and has created an unfilled gap below at 26.39 which is -2.15% below current level.