During the writing of this analysis, S&P futures are currently up 3.45%. We shall see where this potential gap up in the markets will take us tomorrow. In terms of fundamentals, nothing much as changed. I think markets are still trying to digest the effects of the stimulus and how the virus will impact the economy in the long term.
First lets look at SPY which is currently in a small range on the 30m timeframe. Friday I thought markets would breakdown however SPY was resilient throughout the day. With the potential gap up in mind on Monday, the key area to watch is the 20DMA at 253. If we can reject this MA, expect continued weakness. Otherwise if we break above, this is not a buy signal. The 20DMA is still falling and instead the short term trend is neutral. In order for a bullish case, I want to see the 20DMA rising as well as higher high and higher lows.
Like SPY, QQQ also rejected the 20DMA and looks like a Descending Triangle is forming on the 30m timeframe.
IWM is looking very interesting here for a bullish case. IWM has been the laggard during last weeks weakness but is forming a clear falling wedge on the 30m timeframe. Since a gap up is expected, IWM looks good till 109 where there is potential resistance at the 5DMA.
VIX looks like it's now in a clear downtrend. Despite the weakness last week, VIX continues to fade.
First lets look at SPY which is currently in a small range on the 30m timeframe. Friday I thought markets would breakdown however SPY was resilient throughout the day. With the potential gap up in mind on Monday, the key area to watch is the 20DMA at 253. If we can reject this MA, expect continued weakness. Otherwise if we break above, this is not a buy signal. The 20DMA is still falling and instead the short term trend is neutral. In order for a bullish case, I want to see the 20DMA rising as well as higher high and higher lows.