Where to Next?

The NASDQ 100 Index has just broken above an important level and we should see in short order, what the market has in store for investors.  Here is the daily chart and three possible roadmaps for the tech market …

NASDQ 100 Index ETF (QQQ) – Daily Chart

The April 18th pivot high for the QQQ was $167.00 … that level was taken out with today’s price action.  By doing so, you have taken out an obvious prior high/resistance level, and one that the entire market will take note of.  Many algorithm trading programs will attack breaks of obvious resistance/support levels, and that is why you often see the market break to new minor highs/lows before reversing.  In essence, the market traps traders playing the initial break, and you see those “weak hands” get rinsed out of their positions by the stronger, more sophisticated trading entities.

So basically, now that price has broken above the prior resistance level, we are either going to fail and reverse, or we are going to gather momentum, and have the MOMO traders jump on this latest move and we should gain steam as we march towards prior major highs.  I have labeled this bullish scenario as #1 on the above chart … the move off of the last low will need to push through the “ABC” extension target zone of $170.05 – $173.69 if we really are headed to new highs.  Typically, I would expect for price to make a new minor high, and then pull-back slightly to test that break – if the move is real, it will trap sellers at the high and steamroll through them.

Scenario #2 is the bullish scenario I would rather see unfold … in this case, price will fail at this break of a prior pivot high and head down to SLOT support.  From support, price would begin moving higher thereby trapping traders who think that a Heads & Shoulders pattern was about to confirm and price was about to head lower.  It is this outsized opinion and short position that fuels the bigger, more sustainable move to new highs.  In essence, bigger corrective moves prior to an attempt to break higher usually leads to a higher odds chance of that break succeeding.

For the possible bearish scenario, (Scenario #3) I would think that we need to fail here as price moves above the obvious prior minor high, likely in the extension target zone.  Price would then correct lower and slice through minor SLOT support at the $160.92 – $156.86 level.  As price breaks below the prior lows, there would be an outsized chance that price was just setting up an even bigger squeeze that could fuel a move higher, but more likely, this type of move would signal some bigger corrective pattern or even the beginning of a bigger trend lower.

Bottom Line … in any of these case, traders should be paying close attention to closing daily and weekly charts to see what type of move is confirming itself.  I will try and update what I see as we go along.

Also, note that my charting software is painting the past 4 daily candles yellow, which visually warns me that trend strength has contracted to the point where trend was now officially in the “Contraction” zone – what follows contraction?? Expansion does … should be an interesting next couple of weeks/months.

Cheers … Leaf_West

Possible Weekly Pivot Reversal Candle in TSLA??

I have been waiting for the right time to begin shorting TSLA again, and today is the day where I decided to begin.  Here is how TSLA’s weekly chart looks to me …

TSLA Weekly Chart #1

The weekly chart has been in a position of ATR resistance for quite a while now … while that has been the condition, relative strength vs the SPY has made a nice looking bear flag or pendant/wedge pattern, and  money flow continues to leave TSLA.  I think this week has a nice chance to be a pivot candle for price to begin heading lower in earnest.  The early February weekly candle was the warning shot and I was waiting for a failure bounce to the upside to begin a put position and begin getting more active at shorting the stock outright (especially intra-day).

Price has hugged the median line from the broadening price pattern and to me it looks like we could be about to break lower and head down to the lower support line as a first real support level.

TSLA Weekly Chart #2

So price made a nice bounce right into the SLOT resistance zone and now it is likely, in my eyes, to begin the next leg lower.  Will that be the “C” wave of an ABC correction pattern, or will it be the next major leg in the death knell of TSLA, i.e., the 2nd wave of a bigger 3-wave pattern.  If it is just a ABC, then price will likely find support around $265 … if it is a bigger move lower, then $230ish is the likely bigger support level.

TSLA 195-Minute Chart

We didn’t go on to make a new higher high before we look like we made a second break of ATR support … this is the “double-crossover” I like to see when trying to catch inflection points.  The 195-min candle closed a couple of minutes ago and it is still holding on … the next candle closes at today’s cash market close (4pm – $336.10).

TSLA 65-Minute Chart

The 65-min chart is in the position of resistance now and Tuesday’s high ($359.99) will not be broken if my price structure read is correct.

Nothing in my following of TSLA’s fundamentals makes me think that we are going to see a great 2018 operationally, so this could very well be a pivotal year for TSLA’s stock price.

Cheers … Leaf_West

US $ Update – February 23, 2018

I’ve been holding off updating my last US$ analysis until I was more certain that a low for my projected Wave 3 was in place, and I think that is pretty likely with this week’s close.  My last analysis was done on September 8th when I thought that we had just completed the Wave 2 lower in what I was predicting to be a 3-wave move … that analysis turned out to be pretty accurate (click here).  Here are the US$ monthly and weekly charts I posted back on September 8th. Continue reading

Energy Has Found its Resistance Level …

I wrote two pieces about energy stocks and crude oil prices back on August 29th (click here) and on September 14th (click here).  The call on crude oil and energy stocks were pretty good if I do say so myself.  Both crude and energy stocks are at areas where I think they have found obvious levels of resistance.

Crude Oil Futures Contract – Daily Chart

Crude has made a beautiful 3-wave price structure out of a downward broadening price pattern.  My software is painting dark blue extreme trend strength warning candles with pink divergence dots right as price has pushed into the 1.272x – 1.618x extension target zone for Wave 3.  As good a spot for crude to begin a corrective pull-back price structure as any.

S&P Energy Index ETF (XLE) – Daily Chart

As I suggested back in late August, energy stocks made it all the way up into the median line of the upward sloping weekly broadening price pattern.  Crude and energy stocks are going to crush a lot of dreams here over the next couple of weeks I would think.

Cheers … Leaf_West

 

HD Update – October 23, 2017 …

HD is acting pretty well today considering the tape is just kind of choppy.  The 15-min and 65-min chart resistance ATR’s have been broken today, so I decided to take a closer look to see if I should be looking to positionally or swing-trade HD here soon.  There next quarterly report is not due until Nov 21st, so maybe we are about to start a ramp into earnings, which often happen in large-cap market darlings.  Here are the charts … Continue reading