Market Mania Fades: Cracks Emerge, Key Reversals Signals Validated, Now What?
Did Friday's Afternoon Rally Invalidate Weekly Bearish Setups? A Deep Dive with Monthly & Weekly Charts
From Compass at the Top Last Week, to Compass in the Storm Today
As mentioned last week, underlying weaknesses existed, there were cracks below the surface actually since two weeks ago. The major US indexes finally faced rejection at crucial annual resistance levels, including the $S&P 500(.SPX)$ 's 161.8% Fibonacci extension. The current price action aligns perfectly with the analysis written in the previous Weekly Compass.
Everything seemed bullish last week, so what changed?
The $NVIDIA Corp(NVDA)$ euphoria temporarily delayed the pullback. $DJIA(.DJI)$ ' diverging decline from the $S&P 500(.SPX)$ and $NASDAQ 100(NDX)$ (indexes well weighted towards NVDA) exemplifies this.
Last week's $Cboe Volatility Index(VIX)$ chart also hinted at a potential bounce, which materialized.
Other bearish outlooks held true. $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Amazon.com(AMZN)$ $WTI Crude Oil - main 2407(CLmain)$ fell as expected. Others, like $Meta Platforms, Inc.(META)$ , triggered signals suggesting a bearish week.
The European indexes studied, similar to the Dow Jones, served as effective early warnings. While not a foolproof rule, their overextensions mirrored the US indexes. Interestingly, which stock wasn't pushing them higher?
While daily charts for European indexes show potential for a bounce in their daily timeframes, the outlook is different in the weeklies, so conquering key resistances is crucial before declaring them out of the woods, they will be studied here.
NVDA surged past the anticipated $1105 resistance and remains above the support $1013, for now the current price action is a regular consolidation.
This week's educational content focused on candlesticks. NVDA's weekly shooting star presents a fascinating case study.
Finally, Bitcoin continued working in a bearish trend, as discussed last week.
This edition offers valuable insights beyond weekly charts. Monthly charts are included, and $Tesla Motors(TSLA)$ charts hover near the $163.6 level – a support zone with more precision than the 50DMA I use for social media posts.
For the first time in many months, the weekly and monthly charts are synchronized in bearish mode, the bottom expected has been updated.
https://smartreversals.substack.com/p/market-mania-fades-cracks-emerge?utm_source=profile&utm_medium=reader2
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