Market Update 2/20/23
Most of the indexes have turned bearish in the short term with the indicators I use. Below are daily charts of the Dow, the S&P500 and the Nasdaq 100.
Forgive my charts littered with indicators. However, when multiple indicators begin to confirm one another, you may have a high probability of directional change.
Negative Moving Average Crossover
One of the primary indicators I use is the 3 – 8 period EMA (Exponential Moving Average) crossover. On the charts, you can see green and red swaths. Green indicates the 3-period EMA is above the 8-period and is in an uptrend. Red indicates the 3-period EMA is below the 8-period EMA. Changes from Green to Red are bearish while changes from Red to Green are bullish. We have the three main indexes turning Red.
Additionally, the two red and green lines at the bottom of each chart represent the 2-6 and 3-8 EMA crossovers. When the line is green the crossover is in positive territory. When the line is red the chart is in negative crossover territory. When both the 2-6 (the top red/green line at the bottom of the chart) and the 3-8 crossover (the bottom red/green line on the charts) turn red, this is indicative of a coming downtrend.
TTM-Squeeze Falling Histogram
Another indicator showing weakness is the TTM-Squeeze. The TTM-Squeeze indicator compares the Bollinger bands to the Keltner channels. (I will deep dive into this indicator in another post) Essentially, this indicator is used to identify volatility expansion and contraction. When volatility expands/increases this is typically associated with a falling asset price. The TTM-Squeeze histogram indicator is under each of the price charts. When the histogram is trending down, this is a bearish sign. When the histogram falls below zero, this is usually a downtrend with high volatility. We are currently falling and getting close to the zero line.
Current Positions
TSLA
I am still riding a long position in Tesla (TSLA) with a stop at 196. Tesla remains in Bullish mode but I do see momentum waning. See the chart below.
YANG
I continue to ride this one as a short on the chinese market. YANG gave a buy signal back in late January. My stop is 8.8 and I continue to move it higher.
GDXD
GDXD is a 3x inverse gold/silver miner ETF. It seems counterintuitive to buy this one with all the troubles in the world. However, It gave a buy signal at the end of January. My current stop is 7.3. Rising interest rates, rising dollar and falling Gold/Silver prices all make a supportive story here. However, I trade off the charts and trend signals, not the narrative.
SPXS
SPXS is a 3X inverse ETF on the S&P 500. I took a position in this one last Wednesday and Thursday. All the indicators are pointing to the market going lower. I could see another attempt at new highs in the market which would stop me out of the position. At this point, I would wait for the next signal and re-enter.
You can see the past few short trades on the chart with signals in August and another one in December. All indicators are pointing to market weakness.
Summary
It appears the markets are rolling over as of this writing. If the indicators change, I will be flexible and change my overview. Until then, I remain bearish in the near term.
If you enjoy the blog, follow me on stocktwits: @theunderwearmillionaire
or subscribe to my free stocktwits room here:
https://stocktwits.com/r/UnderwearMillionaire/
I post more frequently in the room with more charts of interest.
Charts of Interest
Below are more charts of Interest
Possible short on the QQQs
Potential way to short the big-cap techs
If Apple and Tesla roll over, this one will fly.
Bitcoin is in buy mode; odd, interest rates are rising. Never argue with the charts and Signals.
A bitcoin miner and proxy play on bitcoin. I did well with this one on the last run-up and shorting it in the last downturn. No position here currently but looking for a possible long entry since the latest buy signal.
