One, two, three days where markets haven't collapsed? Awesome! Ok, sarcasm aside, what do the charts say about whether this bear market rally - as pathetic as it is so far - has legs?
Highlights:
- Nasdaq Composite (COMP)
- Russell 2000 (RUT)
- CBOE Volatility Index (VIX)
- Spot Gold vs $US (XAUUSD)
- West Texas Int. Crude Oil ($US-brl)
- Iron Ore 62 percent Singapore ($US-t)
- S&P ASX200 (XJO)
- Bitcoin vs $US (BTCUSD)
Nasdaq Composite (COMP)
The COMP remains in well established short -and long-term downtrends (light pink / dark pink trend ribbons). The price action remain lower peaks and lower troughs. The last 3 trading sessions have seen a tentative return of the demand-side. However, upper shadows on these candles indicate the supply side remains active, continuing to target rallies to sell into. Elsewhere, it's clear the demand-side doesn't have the resolve to see out the trading session. This price action is consistent with a bear market, and supply is expected to persist until at least a close above the short-term downtrend ribbon (11,720). View: Bearish, sell rallies until a resumption of higher peaks and higher troughs, and a close above 11,720.
Russell 2000 (RUT)
The RUT is worth keeping an eye on, because like the COMP, it represents the most risk-off spectrum of the US market. Much like the RUT and COMP led the way down with trend changes well before the other benchmarks, these indices must lead with respect to a sustainable recovery. Unfortunately, the technical signals remain well entrenched to the downside, and if anything - the RUT's recent bounce appears weaker than the COMP's. Unlike the COMP, the RUT's last 3 trading sessions have failed to close above the 16 Jun candle which is clearly a major supply event. 1701-1715 remains a key supply area, and then the short term trend ribbon (1,800) will nag at any rally past that. View: Bearish, sell rallies until a resumption of higher peaks and higher troughs, and a close above 1,800.
CBOE Volatility Index (VIX)
The VIX continues to compress within a range between the low-20's and mid-30's. The short-term trend remains to the upside, and whilst the long-term isn't particularly steep - it is looking increasingly entrenched. There's not a great deal of technical analysis one can do on the VIX, but looking at the chart above, it does appear we're likely to get more, not less volatility in the near term.
Spot Gold vs $US (XAUUSD)
The price action on spot gold increasingly points to building excess supply. The short -and long -term trend ribbons are offering stiff dynamic resistance to the upside. Gold bugs might take some heart in the fact that the last swing low at 1,803 is higher than 1,787, but I would suggest there's just too much evidence of building supply to warrant much optimism. A close below 1,803 would likely instil a greater degree of downside impetus. Still, there are a number of potential demand points between here and 1,676 for the bears to contend with. View: Bearish, sell rallies until a close above 1,877.
West Texas Int. Crude Oil ($US-brl)
One of the last remaining macro uptrends, but to be fair, the uptrend here has contributed to downtrends pretty much everywhere else! It's the oldest problem for oil bulls: eventually, the trend is too good and breaks the economy, which is bearish for oil. It's just a matter of time until you hit that inflection point in any oil bull market - I just assumed we had one more almighty push to $150...$200? before we did. You never know...but for now, the short term trend is busted. 116.58 is now supply, with 121.70 the key level which needs to be eclipsed to swing back to the bull case. There's likely to be plenty of demand on the downside as a cluster of points between 92.93 and 103.20 come into play. View: Neutral, resume bullish on close above 123.70, initiate bearish on a close below 92.93.
Iron Ore 62 percent Singapore ($US-t)
This one has cracked. As much as I wanted to believe the rally from 119 to 147 had legs, the recent switch back to risk aversion (not to mention continued movement restrictions in China due to COVID-19) have done the work here. The short-term trend has re-established to the downside, and the long-term downtrend has resumed. 119 now becomes supply, with 106 the key demand point to the downside. If that cracks, scared face emojis 😱, because there's little holding us up until the major swing low at 84.60. That short term downtrend ribbon will need to be cracked (130) until I could even contemplate a sustainable rally here. View: Bearish, sell rallies until a resumption of higher peaks and higher troughs, and a close above 130.
S&P ASX200 (XJO)
We're a couple of hours into the that last candle, and there's nothing to suggest the supply-side is backing off in any meaningful way. The demand-side has been unable to push through after a promising candle on 21 Jun. The severity of the decline, coupled with the feebleness of the rally, is not great for ASX bulls. 6,758 feels a long way away now, and the short-trend ribbon is even further past that. Likely to be more relevant for capping prices in the near-term, is a mini pressure point at 6,600. Until we see a close above it, preferably with some convincing demand-side candles, I'd suggest we're still in sell the rally mode. 6407 is now the key demand point, all hope pegged on it - otherwise 6,248 beckons. View: Bearish, sell rallies until a resumption of higher peaks and higher troughs, and a close above 6,600 (but really more like 6,758!).
Bitcoin vs $US (BTCUSD)
Bitcoin just can't catch a break. There's almost a sense of inevitability about it's step down pattern. The faithful have switched from rock-solid, unwavering demand, to resignment and despair. There still #HODLING in their droves though, bless them. Obviously, someone's selling, most likely institutions shorting via derivatives, leveraged plays scrambling out, and the usual supply from miners. It doesn't really matter, the trends are clear - down and down on the short -and long-term trend ribbons. 22,960 moves to supply, 25,366 after that.
25,366 is the key level, no action required until a close above that (assuming you're looking to get in!). 17,585 is demand, and the volume down there does demonstrate some whales stepped in to soak up the panicked supply. It could be THE low...candles, volume, volatility all check out...but that's what I thought about 25,366! The last couple of candles (21-22 Jun) are disappointing and demonstrate whilst there is demand on dips, there's nothing following through afterwards...just the resilience of that supply. If 17,585 goes, then 13,870 will be the point where we get to do it all again. Maybe that's THE low!? View: Bearish, sell rallies until a close above 25,366.
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