Week 40 — How will the White House Cluster affecting S&P 500?

In Week 39 market round up, I mentioned 4 signs that could signal S&P 500 stock market bottom and last week turned out bullish as S&P 500 held up the gain after breaking out from the falling wedge pattern despite volatility picked up on Friday as Trump was tested positive for COVID-19.

Although S&P 500 did not dropped below the key support at 3300 on Friday based on the news alone, there is a White House Cluster for COVID-19 and there could be more negative news around this specific cluster coming out in the coming weeks while a lot of people are watching the unfolding of the key event — US selection on 3 Nov 2020. So from now till the US election, we could expect rising of volatility in the stock market as spooked by the uncertainty in the election, COVID-19 and the economy.

Let’s tackle the volatility with the chart based on the price and volume alone.

Scenario 1: More bearish news and the market drops
Should the S&P 500 break below 3300, the next level of defense is 3200–3230. Bearish level will be escalated if 3200 is broken and need to be re-assessed.

Scenario 2: More bearish news and the market holds/rises
Similar to the price action on last Friday (2 Oct 2020), the sentiment was bearish and lots of traders speculated a break below 3300. Supply increased together with the volatility, yet the market holds and recovered some of the losses during the US session.

S&P 500 will have more choppy price action and climbs a wall of worry within the trading range 3200–3600.

Scenario 3: Not much bearish news and the market holds/rises
Volatility settles down with decreasing supply while the S&P 500 climbs up slowly within the trading range 3200–3600.

Based on the price structure and supply level, I still favor Scenario 2 & 3.

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. The highlights on last week content containing how to profit from false breakout, how to trade breakout with high winning rate, rising & falling wedge pattern trading with volume analysis and a lot more:

Market analysis on 28 Sep 2020 - How to trade the descending or falling wedge with high win rate

Market analysis on 29 Sep 2020 - S&P 500 how to trade trend reversal with supply and demand

Market analysis on 1 Oct 2020 - S&P 500 how to trade rounding bottom breakout with high win rate

Market analysis on 2 Oct 2020 - S&P 500 Trading false breakout and profit from trapped traders

Stock Watchlist — Malaysia

VS (V.S INDUSTRY BHD) — as expected last week, VS continues to climb higher. 2.13 is the support. Continuation to the upside is expected if the support holds.

JHM (JHM CONSOLIDATION BHD) — JHM is still lacking of quality demand to push up the price. Support is at 1.5 while the resistance is at 1.76, 1.9.

REVENUE (REVENUE GROUP BERHAD) — Both the demand and supply were poor. A break above 1.2 could kick start a rally towards 1.3. Support is at 1.13.

FRONTKN (FRONTKEN CORPORATION BHD) — trading range between 3.25–3.8.

FPGROUP (FOUNDPAC GROUP BERHAD) — supply has been exhausted. Volatility is low which is a bullish character. Quality demand is needed to push up the price to test 1.07 followed by 1.2.

MI (MI TECHNOVATION BERHAD) — Tested the upper trading range at 4.4 and was rejected. It is still within a trading range between 3.7–4.4.

PENTA (PENTAMASTER CORPORATION BHD), a strong stock in the automated testing equipment (ATE) group, broke out a few days ago, drawing out a lot of supply. 4.5–4.75 is the support area and monitor for supply absorption for long entry.


Stock Watchlist — US

MSFT (MICROSOFT) — MSFT is still within the trading range between 198–216. The rally was weak last week. So far the supply level is still high which is not constructive for bullish case.

META (FACEBOOK) — watch out how the reaction could unfold to test the support at 240–250.

SE (SEA Limited) — Trading range between 130–164. This is a strong stock that’s outperforming the market.

JD (JD.com) — Support is at 72. A break above 78 could see JD to test 86.

NET (CLOUDFLARE) — possible undergo supply absorption near the resistance. A break above 43 could see NET tests 45. Currently right within the supply zone.

NASDAQ:LVGO (LIVONGO HEALTH) — Low level of supply with a trading range between 111–150. Potential supply absorption in progress. Likely to test 150.

PTON (PELOTON) — as expected last week, PTON broke above 100 and hit all time high again. Support is at 98.

BABA (Alibaba Group Holdings) — BABA broke above 280 and likely to test 299.

BTG (B2GOLD CORP) — BTG is still within the trading range between 6–7.5.

FSLY (FASTLY INC) — as expected last week, FSLY tested 102 with a rejection tail. Possible supply absorption in place. It is likely to break above 102 and challenge 116.

SQ (SQUARE INC) — as expected last week, SQ broke above 158 and tested 169. It is likely to test all time high again.

APPS (DIGITAL TURBINE INC) — APPS hit all time high again on Friday. More Further upside is expected.

AVGO (BROADCOM INC). It is currently trading between 345–375 tight trading range.

PENN (PENN NATIONAL GAMING INC) - a high beta stock from 5 to 70 since March 2020, is another multi-bagger. It is likely to breakout and continue to climb further after breakout the resistance at 75.


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