I haven’t posted much lately as we have been in this continuing choppy move up in the past two weeks. Not much has changed now, but I can give some additional insight as to where my trade is and what I am prepared for.
Since April began, we have just been chopping around the March close. Over the course of seven trading days we’ve gone nowhere. The interesting thing to me is that since breaking beneath 4140 last April/May, this has become clear resistance on the Monthly chart (ignoring the wicks). So despite all the hubbub of the new bull market, blah blah blah, we still haven’t been able to break up here (AND CLOSE) a monthly candle above this level, so until I see a green monthly candle break and close above this level, I remain bearish.
Furthermore, the 20 Month MA is still right above where we are at. We can certainly still get some testing up there (around 4175 as of right now), but there are still plenty of trading days left this month to close back beneath 4140. If we do end up breaking above 4140, next stop would be 4200, which is the final line in the sand for me. The patterns I have been following will officially be broken up there and I’d have to get long for at least a few months.
On the daily chart, since the beginning of April we tried to run up to break back to highs and failed. Then we tried to reject and failed that way too. So now we are in this holding pattern until CPI tomorrow, followed by earnings season kicking off this week with some big banks.
As stated above, if we break up towards 4150 then we are likely going all the way to 4200 as well. If we break above there (green arrow), my patterns are broken and I’m out. If we reject (purple arrow) then I would hope it is the last time we are in that area for a long long time. To the downside, I’d need to see that ascending trendline finally break (COVID lows drawn through October 2022 lows). To put a round number on it, we’d need to break about 3850.
In a nutshell, this endless chop is very wearisome. I am in basically a holding pattern. And while I hear all the bulls cheering about a new bull market, even market investors have to be getting weary as well as we have officially not gone anywhere for just about 12 months now. Perhaps this month will determine the winner. Best of luck to all this week.
