It’s a difficult choice, what to write about this weekend, as we still haven’t gone anywhere. But, I think I’ve got a few things I can say, not all of which have been said recently, and I have some position changes I made today that I can also mention.
As always, it’s good to look at the basics first. We have this rising wedge, rising into the resistance of the 89-week SMA—from which we got a reaction—and the trend line from the August and February highs—which we’re glued to like my brain is glued to the dopamine released from the consumption of coffee.
So, the question before us remains whether this consolidation is a distribution or an accumulation. And that’s not an easy thing to discover, but I still lean to the view that it’s a distribution. If we rally through the 89-week and find tested support on it, that changes things dramatically, but if we reject, we should be in trouble, even if that involves a brief look above that moving average that fails. The key will be tested support, and not a probe (if we get that).
I don’t know if we’ll do that probe or not, but here’s what I can do with a count, for the time being.
At any rate, the Russell has stayed low and subdued. The Nasdaq 100 has stayed strong. And as a result, the S&P 500 has been caught in the middle. So if there’s going to be something bearish coming, we’ll want to see the Nasdaq components take a break.
And I don’t have a lot here that says it must, right here. But, I do have a few things that at least open the door, and I will point those out now. What I have here is a lot of trend lines. There are important tech stocks at resistance. They can break that. But, there can be sellers here on many names. So let me show you some of those.
$META is at resistance:
$MSFT has a trend line just overhead:
$GOOGL has a bear flag trend line here, too:
And $AMZN, also a trend line here:
So, if the market’s really bullish here, all of these can just push through these. But, if sellers show up on all these names all at the same time, the juggernaut of the Naz can see some softening. And sometimes softening can lead to more softening, and if the indices start losing support—like if the S&P loses its range—things can take a turn for the worse (or the best, if you’re a bear).
Hell, even Bitcoin looks to be rejecting a long-term trend line that has governed its bull market:
I’ve complained about this trend line before, and from that article, it fell almost 13%. If it keeps this up, it’s not good, as Bitcoin tends to do well when the Nasdaq does well, as both are more speculative and respond well in liquidity environments.
Oh, I suppose we can also look at $TSLA, which I discussed a bit more back here. In that article, I discussed a couple of ways we might interpret its price action. And now, let’s look again.
So we’re in a sideways consolidation. If it’s a distribution, it can break down, and for that to happen, we need the Nasdaq to make a turn. And, that’s at least possible here given all the various trend lines and other structures that we can see here. If sellers come all at the same places, things aren’t going to hold up, I don’t think.
Finally, a few position changes I made today.
So, that’s what I’ve been up to. I’m willing to wait longer now, and have moved some things around in case we need more time. I never quite imagined such a long consolidation. 3 weeks is pretty typical. This is becoming more and more extreme by the day—obscene even. So, I’ve got to try to accommodate that.
Hopefully, as has been my refrain, we don’t stay stuck here too much longer. It’s a bit tedious and I’m running out of things to talk about. I hope everyone has a good weekend, and I will see you next week.
