Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Stocks Brace For Impact

By Michael KramerStock MarketsAug 09, 2022 15:50
ph.investing.com/analysis/stocks-brace-for-impact-123705
Stocks Brace For Impact
By Michael Kramer   |  Aug 09, 2022 15:50
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
US500
-2.11%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DJI
-1.54%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MSFT
-1.48%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
QQQ
-2.88%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
-4.05%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NFLX
-2.24%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

The S&P 500 had risen by nearly 1% at the start of the day yesterday, but by day’s end, all the gains were gone, with the index finishing 12 bps. There are now two bearish trading patterns in the index that I am noticing, given yesterday’s weak close. The first is the rising wedge pattern, which I have repeatedly pointed out. The second is the 2b topping pattern that appears to be present in the S&P, Dow, and QQQ ETF.

The rising wedge in the S&P 500 is easy to see, and it tested support again yesterday. The index attempted to take out the highs from August 3, was promptly rejected, and then closed below the August 3 price of 4155.17. That sets up what I think is that 2b Topping Pattern.

S&P 500 Daily Chart
S&P 500 Daily Chart

QQQ

The same pattern is present in the QQQ ETF, when the ETF tried to take out the highs from August 4 and was promptly rejected.

QQQ Daily Chart
QQQ Daily Chart

Dow

The same pattern is present in the Dow Jones Industrials as well.

DJIA Daily Chart
DJIA Daily Chart

These 2b patterns can be invalidated if the market can clear these prior highs. If not, then the 2b pattern sends that potential reversal signal. This diamond pattern in the S&P 500 futures and the rising wedge also speaks to a possible reversal in the market to come.

S&P 500 Futures 1-Hr Chart
S&P 500 Futures 1-Hr Chart

VIX/VVIX

Additionally, we saw the VIX to VVIX ratio drop again yesterday, most notably because the VVIX index rose by around 3.3% yesterday, while the VIX rose by 60 bps. The declining ratio and the rising VVIX index tell me that very quietly implied volatility is starting to rise again in this market.

VIX / VVIX Ratio Daily Chart
VIX / VVIX Ratio Daily Chart

NVIDIA

NVIDIA (NASDAQ:NVDA) pre-announced its quarter, posting disappointing results and a significant revenue miss. The news was surprising, especially since it was NVIDIA, a company that doesn’t miss very often. Yesterday’s news killed whatever upward momentum NVIDIA had, dropping it below a short-term uptrend. I’m surprised it was down by just 6%.

Nvidia Daily Chart
Nvidia Daily Chart

Microsoft

Microsoft (NASDAQ:MSFT) also looks like it may have that rising wedge pattern in it. Additionally, a bearish divergence is taking place with its hourly RSI. That big gap needs to get filled at some point, too, all the way down around $252.

Microsoft 1-Hr Chart
Microsoft 1-Hr Chart

Netflix

Netflix (NASDAQ:NFLX) rose yesterday, something I didn’t think was likely, but it also looks more evident that that stock has a rising flag pattern. Flag patterns that rise are reversal patterns and tend to result in a drop back to the origin, in this case, around $175.

Netflix Daily Chart
Netflix Daily Chart

Original Post

Stocks Brace For Impact
 

Related Articles

Michael Kramer
Stocks Rally As Rates Plunge By Michael Kramer - Sep 29, 2022

Stocks jumped yesterday after the Bank of England noted it would help to stabilize the British bond market. Rates fell dramatically across the curve in the UK, resulting in rates...

Stocks Brace For Impact

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email