If there is one thing we know about the markets, it is that we do not know what comes next.
With the markets, anything can happen. Anything can happen, at any time.
What the markets do tomorrow [and the next day, and the day after that…] may be what is expected, or maybe not.
Therefore, the second thing we [should] know about trading the markets is to play it safe. Be prepared. Be prepared for the unexpected. That may mean a hard stop is in place on one’s trade, or that one is watching like a hawk to get out immediately if the trade goes bum. Have it your way. Just be certain that your way keeps losses Small.
Upsy-daisy is an older phrase that some of you youngsters may never have heard. As interjection, it is an expression, usually of reassurance, said when someone stumbles or is being lifted up.
Whoops-a-daisy is what many issues in the market have done of late, as in, taken a hit to the downside.
Upsy-daisy is what the markets might do next in terms of rebound. Of course, the stress is on the word, might.
To see, by way of charting, some upsy-daisies that may be in store, here are a few companies to examine.
First is NVR. NVR, Inc. operates in two business segments – homebuilding and mortgage banking. This company is interesting, if only because their current price is $5415.98. Geez. Whatever they have or have not done, they have obviously done mostly right. NVR opened on the market at $0.10 in 1985. Yes, 37 years ago, but still, impressive.
Look at the yearly chart first to get the big picture:
Then note that the monthly chart, although a week from finalizing, shows weakness:
Weakness is further shown on the weekly chart:
Finally, a closeup with the NVR daily chart to see/guess/analyze what may happen next:
In the chart above, note the purple dotted uptrend lines that caught the reversals south. The blue dotted downtrend lines work as well to mark resistance and potential reversal to the upside.
The green and red dotted horizontals are top and bottom of the Ichimoku Cloud. Interesting to further note that the solid red uptrend line is from 1990 and intersects precisely at the top of the Cloud. Earnings for NVR are January 27th.
In league with Lennar Corp, KB Homes, DR Horton and PulteGroup, NVR is in the homebuilding sector ETF, XHB, where downside is shown on its monthly chart. The uptrend from 2006 [yellow] has been lost; price now being held by the uptrend from 2007 [blue], which is almost exactly intersected by the uptrend from 2009 [green].
Not nearly as long-lived as NVR, RACE has put on a pretty good show from its beginning in 2015. The monthly chart shows that RACE lost its bid for higher highs last month in December 2021, and is neatly resting on support from 2018:
On the RACE daily chart below, one can nip and tuck price action via the purple and blue dotted trendlines. Once again, green and red dotted horizontals are top and bottom of the Cloud. Broken red dotted uptrend line is from 2016, as is the unbroken solid green uptrend line. Earnings are February 2.
Next is ZS and one word for the yearly chart: Oops.
It’s a long, long way to the end of 2022, but even so, the yearly chart makes a dynamic picture. The monthly chart of ZS doesn’t look so good either:
To dissect price action further, below is the daily chart. Which way does it go next? I do not know, but these are the lines of support and resistance that I’ll use to stay on the right side of a trade. Especially noting the top orange uptrend line from 2016: holding above that removes any bet on the short side. Earnings are February 24th.
Lastly is CLF, using the monthly chart for perspective. In August 2021. the uptrend from 1989 [top red] failed to be recaptured.
This daily chart of CLF looks pretty bad. Earnings are not until February 11. Support and resistance lines are drawn, wiith a clean double top and lower high since. Just as with this latest plunge, this stock has had mighty upswings. Whether it can do so again, remains to be seen.
Upsy-daisy: Maybe; maybe not.
