Not Out of the Woods Yet - Correction Still Possible
This is not investment advice. Invest at your own risk. Do your DD, and manage your risk.
My one fault in my "Feeling Overextended?" idea was not providing local short-term levels that we will need to hold or break through. If you have not read that idea, I recommend you do. On with the analysis.
Analysis
Daily
As an update. MACD has officially crossed below the signal line so we are technically in a downtrend.
Hourly
Yellow lines show our key levels. EMAs provide dynamic support/resistance. Confluence of horizontal price targets and EMA strengthens the price level. Price action is still technically bearish as we have yet to former a higher high, however, we have set a local higher low.
Soft-confirmation of a deep correction is another breakdown of the 3868 support level. We already broke through in the early portion of yesterday's session before Powell's testimony and we may retest this level again. If we break down past the 3868 level again, we will then retest the 1000 EMA (yellow). Deep correction confirmation would be a break down past the 1000 EMA.
Local resistances will be the 200 EMA (red), 3900 and 3940 levels. Soft confirmations of uptrend will be a break through first the 200 EMA, then the 3900 level. Strong confirmation is a break through of the 3940 level.
VIX
When I posted the original analysis, we were sitting at 22.1, right at the top of the Covid-crash gap up. Since then, we have spiked upward as the market became rocky, then pulled back as Powell's testimony seemingly laid investor uncertainties to rest. At the moment, we have set higher highs and higher lows so we are technically still in uptrend for the VIX. Any dip in the VIX is an attractive entry for its related securities (HUV, VXX, UVXY).
Reminder that the VIX is typically used as a hedge, appreciating as the market downturns. While this can be a full trade, I recommend this more as a small "insurance" holding to offset losses in a correction. This will provide you with some free capital to spend on any discounts. Inverse exposure ETFs on the indexes are viable hedges as well (HSD, HQD for my fellow Canadians, eh), but should not be held for a long time due to asset value decay.
Thanks for reading! I hope this was helpful.
This is not investment advice. Invest at your own risk. Do your DD, and manage your risk.
My one fault in my "Feeling Overextended?" idea was not providing local short-term levels that we will need to hold or break through. If you have not read that idea, I recommend you do. On with the analysis.
Analysis
Daily
Hourly
Soft-confirmation of a deep correction is another breakdown of the 3868 support level. We already broke through in the early portion of yesterday's session before Powell's testimony and we may retest this level again. If we break down past the 3868 level again, we will then retest the 1000 EMA (yellow). Deep correction confirmation would be a break down past the 1000 EMA.
Local resistances will be the 200 EMA (red), 3900 and 3940 levels. Soft confirmations of uptrend will be a break through first the 200 EMA, then the 3900 level. Strong confirmation is a break through of the 3940 level.
VIX
When I posted the original analysis, we were sitting at 22.1, right at the top of the Covid-crash gap up. Since then, we have spiked upward as the market became rocky, then pulled back as Powell's testimony seemingly laid investor uncertainties to rest. At the moment, we have set higher highs and higher lows so we are technically still in uptrend for the VIX. Any dip in the VIX is an attractive entry for its related securities (HUV, VXX, UVXY).
Reminder that the VIX is typically used as a hedge, appreciating as the market downturns. While this can be a full trade, I recommend this more as a small "insurance" holding to offset losses in a correction. This will provide you with some free capital to spend on any discounts. Inverse exposure ETFs on the indexes are viable hedges as well (HSD, HQD for my fellow Canadians, eh), but should not be held for a long time due to asset value decay.
Thanks for reading! I hope this was helpful.
This is not investment advice. Invest at your own risk. Do your DD, and manage your risk.
Comment:
Still bearish. We got faked out with 3900 breakout and hit 3940 major resistance. Soft vs hard confirmations. Must break 3868-3900, otherwise, will continue downtrend.
