Not all stock market indices in the United States have had a party, but automated algorithms and select technology sector stocks that did are currently experiencing a blip in the bipolar, artificial intelligence, machine-driven Matrix. Be sure to watch Lacy Hunt’s most recent interview on the economy where he warns us to “buckle up.” It’s posted at the end of today’s technical analysis. Here’s an excerpt from the early spring analyses:

“Capital seeking shelter in stock markets with each sliver of Goldilocks hopium is growing weary as the Federal Reserve and Western central banks remain hawkish on concerns over inflation. Visceral vibes of lethargy in financial markets, a recessionary global economy, societal ill, online partisan interactions, and the real threat of a wider WW3 kinetic exchange amidst rhetoric over the Ukraine proxy war (updated link) have every politico and awake individual on edge. Wrongthink or dissent in the current atmosphere of opposing points of view are strictly prohibited while driving among road rages, Karens shopping, relatives and friendly gatherings, and the ‘meat grinder’ battlefield surrounding the Donbas. Even when you are blessed to not be in less fortunate shoes, nothing feels copasetic, and economic statistics are whack.” – TraderStef

I will refrain from providing an extensive link garden to the plethora of insane financial, domestic, and geopolitical headlines since early spring, but there are a few salient points and a graphic worth mentioning today:

 

• Implosion of Commercial Office Space Has Begun, Part 3: Fire Sale – TraderStef
• The Greater Financial Crisis of 2024 – Jim Rickards
• A “Global Inflationary Depression” Is Very Possible – Advancing Time
• Fitch Downgrades US Credit Rating, Cites Debt and Political Divisions – USNews
• Moody’s cuts credit rating of 10 U.S. banks, big names on downgrade watch – CNBC
• Money contraction is biggest since Depression. Peak to trough, worst since the 1860’s – Peter St Onge

 

• The European Energy Crisis May Be Back Soon – Dan Lacalle
• Fitch warns it may downgrade dozens of banks, including JPMorgan Chase – CNBC
• ‘Big Short’ investor Michael Burry’s bets $1.6 billion against S&P and Nasdaq – Markets Insider

Let’s move on to the Dow, S&P 500, and Russell 2000 charts to see what happened since March 6 and the Nasdaq 100 since May 31 (A.I.-Related Stocks Are Bubbling the Nasdaq). Keep in mind that if or when the Fed returns to full-blown quantitative easing (QE) or some other dovish mode as the latest #TaperCaper unfolds, liquidity injected into the recessionary West will likely rally stock markets until the global debt endgame plays out. Also, technical analysis of a weekly chart is a window of opportunity for scalp or swing trading individual stocks, indices, ETFs, or futures for a few weeks and not a long-term outlook. To view a larger version of any chart below, mouse over it to select or right-click and choose a “view image” option.

 

$DJI Dow Jones Industrial Index weekly chart as of Aug. 16, 2023 at 5:30pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The Dow’s price action tapped 34,596 one week after the previous analysis, then rolled over for two weeks. The next candlestick had a long wick that printed a higher high at 34,712 but ended the week with a bearish Plunger Candle (aka Shooting Star) following Jay Powell’s Fedspeak during his FOMC monetary policy announcement. Support was found at the 50 Exponential Moving Average (EMA), the Descending Broadening Wedge’s topside trendline, and the 23.6% Fibonacci at a 32,573 low. Tomorrow is the last trading day of the week and for 2022. This week’s candlestick will remain in indecisive Doji land (aka Rickshaw Man) unless tomorrow’s price action transforms the candle to a bullish or bearish signal. The DMI-ADX is transitioning and may trend bearish, the StochRSI was overbought and threatens to rollover into bearish territory, and buy Volume trended downward into the rally off an Adam & Adam Double Bottom (see daily chart) that’s indicative of more downside or consolidation. If the price action remains above the 50 EMA and consolidates, a rally might resume, but seasonality and economic indicators suggest downside into early 2023 that could probe the October lows. The chart is neutral and a scalping environment for professional traders.”

Excerpt from the Mar. 6, 2023 weekly chart analysis:

“The Dow has not made a new high since a mid-December high of 34,712 with a Plunger Candle close. The current price action is choppy and remains above the Descending Broadening Wedge’s topside trendline and 23.6% Fibonacci while riding along the 50 EMA…  and a price plunge to 32,500 last week that followed three indecisive Spinning Tops (aka Long Legged Doji) in the first half of February. If the price breaches 32,500, the next intermediate levels of support are 31,400, 30,500, and 29,800…The DMI-ADX is trending neutral and leaning negative, the StochRSI has rolled over but is not yet in decisive oversold territory, and the Volume is steady and unremarkable. The chart remains neutral and a scalping environment for professional traders. Upcoming economic news, geopolitical developments, and the Fed’s FOMC policy decision on the spring equinox will all determine the near-term direction of all market indices.”

The Dow briefly broke below the 38.2%-23.6% Fibonacci Confluence zone around 32,500 in mid-March and printed a low of 31,430 slightly below the 23.6% level. The price action pivoted upward and back to the 61.8% Fibonacci and the completed a right shoulder to form a bullish Inverted Head & Shoulders pattern with a Neckline at the 61.8% level. That Neckline was taken out in mid-July and printed at high of 35,679 before a Throwback over the last three weeks that’s testing support at the Neckline. If that support fails, the next support levels are the red trendline drawn up from the Oct. 2022 Adam & Adam Double Bottom (see a daily chart), the 50 EMA, the Fibonacci Confluence at the 23.6% level, and then the 31,430 low from March. If the Dow rallies, upside resistance is between 36,000 and the Jan. 2022 high in the 36,950s, then the 100% Fibonacci Extension level in the 37,470s.

The DMI-ADX is fading from the Alligator Tongue power-trend setup, the StochRSI is rolling over again in overbought territory, and the Volumes are steady. The price action was choppy since Dec. 2022 before breaching the Inverse Head & Shoulders Neckline in mid-July. Despite the upside price action since May, the chart is neutral and a scalping environment for professional traders. Keep a close eye on that red trendline.

$SPX S&P 500 Index weekly chart as of Aug. 16, 2023 at 5:30pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The SPX tapped 4,101 one week after the previous analysis, then stalled at the overhead 50 EMA and Descending Broadening Wedge’s topside trendline. The subsequent Plunger Candle has a long wick that printed another 4,101 high, and its low bottomed at 3,828 following Jay Powell’s Fedspeak during his FOMC announcement… If the price action remains above the 38.2% Fibonacci level and consolidates, a rally might resume. The chart is neutral and a scalping environment for professional traders.”

 Excerpt from the Mar. 6, 2023 weekly chart analysis:

“The SPX consolidated for a few days while printing another Doji during the first week of January, rallied off the 38.2% Fibonacci, then breached the Descending Broadening Wedge’s topside trendline and 50 EMA. A high of 4,195 tapped the overhead 23.6% Fibonacci and was followed by two Spinning Tops in mid-February, then briefly fell below the 50 EMA… Today’s price action closed slightly above the 50 EMA at 4,048. The red trendlines draw attention to a possible Rising Wedge that’s not bullish if it continues. Support rests at the lower red trendline and 38.2% Fibonacci confluence just above 3,800. Resistance is at the Fibonacci Confluence at 23.6% near 4,200. The DMI-ADX is trending neutral, the StochRSI is in partial overbought territory, and the Volume is steady but unremarkable. The chart is neutral and a scalping environment for professional traders.”

The Rising Wedge morphed into an Up Channel (red) and tapped the topside trendline of the wider Up Channel (black dotted lines) drawn from the March low. The price action got ahead of itself in July, printed a Plunger Candle, then hit resistance around 4,600 from the March 2022 highs and rolled over for the last three weeks. The lower trendline of the red Up Channel was breached to the downside this week, and sell Volume might match the previous two weeks. Support is clear at the 23.6% Fibonacci Confluence and 50 EMA. Below those levels we could see a price plunge if 4,000 is breached on a Volume surge. Topside resistance is at the all-time high in the low 4,800s.

The DMI-ADX is rolling over, the StochRSI has collapsed, and Volumes are steady. Due to a breach below the red Up Channel, the chart is bearish in the near-term and a scalping environment for professional traders.

$NDX Nasdaq 100 E-Mini Futures weekly chart as of Aug. 16, 2023 at 5:30 pm ET…

Excerpt from the Mar. 6, 2023 weekly chart analysis:

“The NDX consolidated during the first week of January, then rallied above the Descending Broadening Wedge’s topside trendline and 50 EMA to a 12,950 high in early February. That upside move was followed by a bearish Gravestone Doji. Last week’s price action printed a low of 11,832 and closed on the 50 EMA at 12,311. Momentum did not follow through today, and the price remained stuck on the 50 EMA. Near-term support rests at the 50% Fibonacci and overhead resistance is clear at the 38.2% Fibonacci. The DMI-ADX is positive but indecisive, the StochRSI is in overbought territory, and Volume is steady. The chart remains neutral and a scalping environment for professional traders.”

 Excerpt from the May 31, 2023 weekly chart analysis:

 “Price action on the NDX rallied from a 10,485 low in October 2022 to a 14,750 high yesterday. After the March analysis, consolidation took place for four weeks beginning in late February through early March before breaking above the 50 EMA. A subsequent rally to the 38.2% Fibonacci level occurred on falling buy volume, which led to a second consolidation through April on steady buy volume. The May rally has run into resistance at the 23.6% Fibonacci this week with two trading days left. The DMI-ADX indicates a strong uptrend is intact, but the StochRSI has been in overbought territory for three months. Buy volume was solid and steady until last week… If the price action breaks out on strong buy volume above the 23.6% Fibonacci, there’s not much resistance until the January and March highs in 2022 at around 15,280. If the price breaks down from here, the first levels of support are the 38.2% Fibonacci and 50 EMA. Despite the recent rally, the chart is neutral and a scalping environment for professional traders.”

The artificial intelligence/chatbot news sparked a rally in a handful of tech stocks that spiked the Nasdaq to a 16,063 high with a Plunger Candle four weeks ago. That rally eliminated a bearish Rising Wedge pattern and morphed into an extended and overbought Up Channel (red). The price action has taken a breather for the last three weeks and is sitting precariously on the lower trendline of the red Up Channel. Resistance is now at the recent high and then the all-time high in the 16,760s. Support is at the 23.6% Fibonacci, 50 EMA, the red hyphened horizontal line drawn from August 2022 to May 2023, and below the 50 EMA where the price action chopped throughout April on the 38.2% Fibonacci.

The DMI-ADX is rolling over, StochRSI has collapsed, and sell Volume is strong and steady. The chart is bearish if the price action takes out the red Up Channel’s lower trendline and another a scalping environment for professional traders.

$RUT Russell 2000 E-Mini Futures weekly chart as of Aug. 16, 2023 at 5:30pm ET…

Excerpt from the Dec. 29, 2022 weekly chart analysis:

“The Russell could not break above the 50 EMA for six long weeks that ended with a Plunger Candle following the FOMC announcement. The most recent high printed in mid-November at 1,913, and this week’s Doji low at 1,731 matched last week’s Doji low of 1,730. Further downside price action could probe the 50% Fibonacci level or 1,640 support at the Adam & Eve Double Bottom… The chart is bearish and a scalping environment for professional traders.”

Excerpt from the Mar. 6, 2023 weekly chart analysis:

“RUT rallied along with the other indices and took out the high from November and 50 EMA. The price action during the first week of February printed a 2,017 high, then rolled over to a low of 1,874 at the 50 EMA while morphing into a tight Half-Staff Flag. Support rests at the 50 EMA and 38.2% Fibonacci. If the price breaks below the 50 EMA with heavy sell volume, the next support level is just above the 50% Fibonacci at around 1,710. The DMI-ADX is positive, the StochRSI is rolling over, and the Volume is unremarkable. Despite the rally and flagging pattern, the chart remains bearish to neutral and a scalping environment for professional traders.”

The Russell is the only index that remains priced to reality vs. the Borg-infested stock market algorithms amid Bidenomics hopium. As suspected, the Flag pattern failed, and the price action plunged to create a second tap on a new lower trendline that formed an Ascending Triangle that could be bullish, but bullishness is an unlikely outcome at this time. Resistance is solid with three taps topside just above 2,000. The price is precariously sitting on the 50 EMA this week, and the next support level is the Ascending Triangle’s lower trendline and 50% Fibonacci level.

The DMI-ADX is breaking down, the StochRSI is plunging, and sell Volume is steady. The chart is bearish in the near term and a scalping environment for professional traders.

Lacy Hunt: Brace For A Credit Crunch And Serious Recession / Get Your Financial House In Order, We’re Facing Perfect Storm Of ‘Economic Deterioration’ – Part 1 & 2 via Wealthion, Early Summer 2023

 

 

Plan Your Trade, Trade Your Plan

TraderStef on Twitter, Gettr / Website: TraderStef.com