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Friday finally saw some buying come into this oversold condition. The market opened Friday with another bear gap. Friday's gap was 61.86 points.
The market opened at 2,916.90 and dropped to a low of 2,855.84. This was a move of 61.06 points or a drop of about the gap open.
From the low, the S & P managed to rally to a high of 2,959.72. This was a move of 103.88.
And the day closed out at 95% of the range of the daily price bar. This does suggest that the odds favor that Friday's high of 2,959.72 should be violated before the low.
And support from Friday should be in the 2,935 area. Under this level, the next level of support should be around 2,908.
But, the S & P is still trading under the lower band on its 60 minute chart. That price level is 3,043. And Friday's close was still about 90 points below the lower band.
This shows you how oversold this market is. Even with a 104-point move off the low Friday, the S & P is still trading about 90 points under the lower band.
So, other than demonstrating how oversold this market is, what can we deduce from this?
Well first off, we want to monitor the lower band to see if the S & P can close back inside it.
If it can, then a move up to the midband could be possible. The midband is 3,284 or about 400 points above the close on Friday.
But, with a move under the lower band, we do expect a retest of the lower band after clearing it.
When we scope out to the weekly price bar for the S & P, we can see just how bearish this market has become.
The weekly price bar had a range of 403.97 points. This was just over 400% of the weekly averge true range.
And the weekly price bar closed a massive 383.53 points lower. And it closed at 24.4% of the range of the bar. This suggests that the odds of violating last week's low before the high, is about 3 to 1.
Resistance from last week's price bar is in the 3,058 area. If this level is violated, then the next area of resistance should be around 3,106.
Finally, I want to scale out and look at the February monthly price bar.
Friday closed out the monthly price bar for the markets, as well as the weekly charts.
And the monthly bar for the S & P closed 271.47 points lower. But, the range for the month was almost twice that amount. The monthly range was 538 points. And it closed at 18.3% of the range of the bar.
This certainly suggests that the market will move lower. Or at least take out the low before the high.
The resistance level from February's monthly price bar is in the 3,100 to 3,125 area.
There are a few comments I would like to make.
The first is that the S & P closed under the upper band on its monthly chart. That price level is 3,105. And the market closed about 50 points below it.
This has been a key level and now we need to monitor it to see if it is possible that the market can recoup it.
I also want to bring up the bull percent index.
This has been the fastest drop in the readings on the bull percent index I have ever seen.
On January 17th, the reading peaked at 83%, which we know is overbought.
It dropped a bit and then peaked at 78.8% on February 20th.
From the 78.8% high on February 20th, the bull percent index dropped to a low of 22.2% on Friday.
This was a drop of 56.6% in only 7 days!
Talk about a run for the exits!
But, having said this, 20% is the oversold level for this index. And it is now within 2.2% of it.
As a point of reference, this index hit a low of 11% at the major bottom back in 2018.
As another point of reference, this index read only 1.6% at the major bottom back in 2009.
The good news is that this index is at the oversold level.
The final comment I want to make is this.
Every Friday, I run scans of stocks in bullish and bearish uptrends. These trends are over multiple timeframes.
And a sampling of these stocks is what I include at the bottom of these updates.
Last Friday, the bearish stocks hit 608 stocks. The prior week, they were only 170.
And the bullish stocks were only 45, as compared with 337 from the prior week.
This was the largest swing I think I have ever seen.
Pre open, the S & P is trading about 24 points lower. This projects to an open around 2,930. Watch the 2,908 area on a drop.
Earnings are slowing this week. We hear from SPLK on Wednesday after the close.
And Thursday afternoon, we get earnings from COST.
Here are the Key Levels for the Markets:
$VIX:
Major level: 28.13
Minor level: 27.35
Minor level: 25.78 **
Major level: 25.00 <
Minor level: 24.22
Minor level: 22.66
Major level: 21.88
Minor level: 21.10
Minor level: 19.53
Major level: 18.75
Minor level: 17.97
Minor level: 16.41
Major level: 15.63
The VIX closed at 40.11, closing 0.95 higher on the day. The VIX did get to almost as high as the 50 handle before pulling back.
It continues to trade well above its upper band on the daily chart. The upper band is 24 and the VIX traded to double that level on Friday.
And it continues to trade above the upper band on its 60 minute chart. That price level is 34.06. Watch for a break under this level. This would confirm a bounce in the markets.
40.63 is the short resistance level on the VIX to watch. It did close just under it on Friday and should still be resistance.
S & P 500:
Major level: 3,427.40
Minor level: 3,398.35
Minor level: 3,320.25
Major level: 3,281.20
Minor level: 3,242.15
Minor level: 3,164.08
Major level: 3,125.00
Minor level: 3,085.95
Minor level: 3,007.85
Major level: 2,968.80 <
Minor level: 2,929.75 **
Minor level: 2,851.65
Major level: 2,812.50
The S & P closed at 2,954.22. The S & P closed about 10 points above the major 2,968.80 level.
Friday's low dropped ot 2,855.84 to about 4 points above the minor 2,851.65 level before rallying into the close.
The next level to watch on the upside will be 2,968.80. If the S & P can recoup this level and close above 3,007.85, we should get the countertrend bounce.
I would expect the bounce to move up to the 3,167 to 3,188 area.
3,043 is the lower band on the 60 minute and this is also a level the marekt needs to reclaim to head higher. Still way oversold.
QQQ:
Minor level: 219.56
Major level: 218.75
Minor level: 217.97
Minor level: 216.43
Major level: 215.65
Minor level: 214.87
Minor level: 213.30
Major level: 212.50
Minor level: 211.72
Minor level: 210.17
Major level: 209.39
Minor level: 208.61
Minor level: 207.04
Major level: 206.25 <
Minor level: 205.47 **
Minor level: 203.91
Major level: 203.13
The QQQ closed at 205.80. The QQQ did break under the minor 205.47 level on Friday, hitting a low of 198.17, before rallying to close above it.
Watch the major 206.25 level and the minor 207.04 level. If the QQQ can clear these levels, it should bounce.
The QQQ broke under its lower band on its 60 minute chart, which is 205.45. It did manage Friday to close just above it. If it can stay above the lower, a move to the midband would be the logical move.
The midband is 224.
IWM:
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.69
Minor level: 151.56
Major level: 150.00 <
Minor level: 148.44
Minor level: 145.31 **
Major level: 143.75
The IWM closed at 146.33. If the IWM can hold 145.31, it should move up to 150.
Like the S & P 500, the IWM is trading well under its lower band on its 60 minute chart. That price level is 152.15.
A bounce up to the 158 area should be the next move, if it can hold the 145 level.
TLT:
Major level: 156.25
Minor level: 155.48
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78 **
Major level: 150.00 <
Minor level: 149.22
Minor level: 147.66
Major level: 146.88
Minor level: 146.10
Minor level: 144.53
Major level: 143.75
The TLT closed at 155.31. The TLT took out the 153.13 level.
Watch the minor 155.48 level. This should be resistance, so if the TLT clears this level it should head higher.
But, the TLT is overbought short term. It is right up against the upper band on the daily cahrt, which is 156.57.
The 150 area should offer technical support.
155.16 is the upper band on the 60 minute chart. A break under this and the TLT should pullback.
GLD:
Major level: 156.25
Minor level: 155.47
Minor level: 153.91
Major level: 153.13
Minor level: 152.35
Minor level: 150.78
Major level: 150.00
Minor level: 149.22 **
Minor level: 147.67
Major level: 146.89
Minor level: 146.11
Minor level: 144.54
Major level: 143.75
The GLD closed at 148.38. A close today under 149.22 and the GLD should drop to 146.89.
148.83 is a minor resistance level and the midband on the 60 minute chart. A move under this level and the GLD should head down to 141.
XLE:
Major level: 56.25
Minor level: 55.47
Minor level: 53.90
Major level: 53.12
Minor level: 52.34
Minor level: 50.78
Major level: 50.00
Minor level: 49.22
Minor level: 47.65
Major level: 46.88
Minor level: 46.09 **
Minor level: 44.53
Major level: 43.75
The XLE closed at 45.27. Watch the minor 46.09 level today. A close under it and the XLE should drop to 43.75.
Trading well under the lower band on the daiyl chart, which is 50.14. Also, trading just under the lower badn on the 60 minute chart, which is 45.71.
The XLE will need to clear the 45.71 level to move higher.
AAPL:
Major level: 325.00
Minor level: 321.88
Minor level: 315.63
Major level: 312.50
Minor level: 309.38
Minor level: 303.13
Major level: 300.00
Minor level: 296.88
Minor level: 290.63
Major level: 287.50
Minor level: 284.38
Minor level: 278.13
Major level: 275.00 <
Minor level: 271.88
Apple closed at 273.36. Apple actually managed to close relatively flat on Friday. If it can reclaim the 275 level, Apple could bounce.
The lower band is 280.71 on the 60 minute chart and Apple is under it.
The 256 area should provide short term support.
WATCH LIST:
Bullish Stocks: REGN, TLT, EVBG, AMN, GILD, NTRA, PDCO
Bearish Stocks: BA, ALGN, VRSN, WDAY, MMM, FDX, WIX, EEFT, TWLO, PYPL, EXPE, YUM, RCL, ZEN, CHRW, CXO, DNKN, W, PLCE
