To The Moon

Poised market

The US market indices had another encouraging day on Friday to push comfortably up. It was despite some pressure from the banking sector again, this time in the form of Deutsche Bank. In a show of market resilience and confidence, the markets recovered after initially threatening to sell off. Hard to make heads or tail out of this market which is still poised and able to move quickly in either direction. Macroeconomic wise, nothing much has changed and the economy is still on a knife edge with possible cracks all around. As such, I believe caution is still pretty much important at this stage of the market.

Technical wise, the broad market index is still within its trading range and the pivots I am watching are still intact. I believe a rally above the 4040 levels might see the market rally further in a possible leading diagonal off the March lows. I am looking at two possible scenarios or what I prefer to call a road map at the moment.

1. A short term bullish rally in the form of a weak diagonal off the March lows. The hourly charts seem to show a possible diagonal with the previous push to the 3900 levels on Friday’s opening to test the previous Friday’s low as a possible fourth wave if the levels hold. At the moment, the market has rallied off those levels and if they can muster enough strength to push forward and overcome 4040, then that fifth wave is in progress to qualify as that weak diagonal. However, how the market behaves afterwards is still important. Three waves down will be bullish whereas a five wave pattern down will indicate further caution.

2. A break below the lower possible leading diagonal trend line at 3930 and then 3900 will see further weakness and increase possibility of the third wave down discussed in the previous article. The next level after 3900 will be 3800 and if that level gives away, that might see the waterfall drop to kick off the C wave down.

I prefer to wait and see what the market decides rather than guess so the levels mentioned will determine positioning of risk levels. Caution is key and hence my defensive positioning. Please kindly do your due diligence as what I share is meant for sharing purposes only and not financial advice per se. Hope the insight helps.

Thanks for reading my commentary.

Stay safe! 😊

$Semiconductor Bull 3X Shares(SOXL)$ 

$NIO Inc.(NIO)$ 

$NVIDIA Corp(NVDA)$ 

$Advanced Micro Devices(AMD)$ 

$Tesla Motors(TSLA)$