Hey Market Pilot,
The market broke support last week and we faced a few stiff days of selling. In my last newsletter I cautioned readers, saying this market doesn’t like to stay down. So once the S&P 500 (SPY) found the daily 50 simple moving average (SMA), it bounced. This was my initial target in my discussions once a pullback was likely since the SPY has a history of going to the daily 50 and then resuming its uptrend.
Everyone keeps wondering, when will things change and we get a deeper correction? Many would say it should be imminent due to the poor breadth in the market. However, there are still big names holding up the indexes. Names like Netflix (NFLX), Apple (AAPL), and Microsoft (MSFT) seem to be doing just fine and aren’t showing any weakness other than possibly being extended. But extended isn’t always a reason for ending a bullish run.
I also discussed the Short-Term Futures exchange-traded fund (UVXY, as I could see it was getting stretched to the downside, likely to reverse, and then start to move up to resistance like daily 50 and hourly 200 SMA. This is exactly what ensued and served as the heads up about the recent market pullback. Now the UVXY is in a position where it will need to decide if it finds support or fails that support. This should indicate to us where the overall market wants to go as well.
We will have to watch the details this week and see which of the moving averages on the lower time frames hold support and whether that is to the long side or the short side. It is a tricky place out there right now, which is what I showed the Moxie IndicatorTM subscribers in this week’s video with Crowdstrike (CRWD), Shopify (SHOP), Apple (AAPL), and Microsoft (MSFT) with their various configurations.