StrayDog's Weekly Analyses, April 12, 2020

Huge up week on both SPX and DAX is behind us. Markets tends to go higher into holidays, and that was the case this time also. Seasonality can be a factor, but more important was that volatility was going down, and liquidation breaks were quickly bought, market behaved in the bullish manner. Important inflection points lies ahead, and to see can sellers step up or not.


In the following week, Economic calendar is pretty thin, and Earnings season will start for US markets - with banks first.


OPEC Meetings and OPEC-JMMC Meetings on Sunday can have impact on Monday price of Crude Oil.


Chart #1 - Crude Oil Monthly



Depending on the result of the talks, Crude Oil could still move under 20, and next Support is 2001 low, at 17.12. For trading, we need to go on lower time frames, and observe levels from Daily down. Likely we will have good opportunities soon on Crude Oil.


How big previous week was for indices, we can observe on Weekly charts, but also by comparing Monthly charts below, with the ones from the previous Weekly Analyses.


Chart #2 - SPX Monthly



SPX now above the "-20% from the ATH" line.


Chart #3 - DAX Monthly



DAX inside the monthly channel again, AND above the Dec 2018 low.


Chart #4 - VIX Weekly



VIX back below 45.


So, volatility going down, liquidation breaks bought, and what inflection points are ahead?


Chart #5 - SPX and DAX Daily, with DMA50 and DMA200



SPX closed on Thursday a bit below halfback of the entire down move from ATH. DAX is weaker. On both markets we have Daily 50 above. As a reminder, bear markets of 1930, 2001 and 2008 all went higher to test halfback and later made lower lows. That is still a scenario.


School book lower low, with bullish divergence and lower VIX was made as bottoming process in 2009 (shown on Chart #4 of the Weekly Analyses from March 29, 2020)


>> Sellers need to step up here, since daily close above Daily 50 and above 61.8 fib retrace would give advantage to buyers. Stay open to all scenarios, especially in short term trading, example below.


Bonus chart - DAX April 9, 2020



IF we understand Context, can gauge the strength of the moves, know what market can do, and what it will likely do, THEN we can be ahead of competition. Parabolic move INTO Resistance after the open, many opportunities, News driven move later, buying pullback... all of those were described in detail in written form and in Recap video. This above is an example for everybody, and also a reminder for day traders to always keep larger time-frames open, not only to be stuck on 1-5 min charts. Often you will understand situation better, and hold winners for longer, if you have 30-60-120 min open as well. Analyses are done top to bottom, always be aware what is situation on Daily charts, Context, and who is in charge.


 

In short term trading it is very important to properly understand context heading into every day, to know from which side wind is blowing - who has the short term control, and which side will be forced to liquidate IF and WHEN market hold above or below a certain level. What is the level of volatility, what can we expect from any particular day, what market already done in premarket session, what possible setups can be available, and so on... the things that we constantly learn in the DAILY DOSE OF DAX.


Cheers, StrayDog