TECHNICAL ANALYSIS (by Intraday Dynamics) This week’s post is free to all readers!
Merry Christmas! Have a Great Holiday!
Major Indices Week of December 20, 2024
Dow Jones Industrial Average Weekly Candles
Stocks traded a wild week with severe declines mid-week across the board. The secondary market is taking it the worst as the RSP:SPY has moved back toward the recent multiyear lows. Volume wasn’t off the charts with the Dow plunging 1123 points on Wednesday, but the trade looks impulsive (meaning it may be signaling a trend change). Note that the closing high in the Dow fell on 4 December 2024 with the highs being set in the critical timing window we defined in the last update for the 5th/6th, where there was a strong potential for a turning point. Friday saw prices plunge early as the Dow filled in the gap left on 6 November 2024, wiping out the entire post-election rally before reversing, while the S&P dipped into the corresponding gap before reversing. The action Friday relieved some deeply oversold short-term conditions. The Russell has plunged over -8% from the closing highs and tested the November trading lows before recovering in Friday’s post PCE rally.
The Dow daily is oversold and Friday it achieved the first bullish candle after 11 straight bearish candles from the critical cycle timing highs. Wednesday’s large plunge marked a 10th day down, the first time since 1974 since that has happened technically. Price and time are now decidedly bearish for the Dow chart and the trading low set intraday Friday at 42146.3 is pivotal. With the daily oversold, can a case be built for the gap now filled to see a resurgence for prices? It is possible, but substantial recovery will be needed short-term. Prices are back under the upper trendline on the weekly, where they spent two weeks above and the weekly is rolling over on the stochastics with a bearish divergence.
Sentiment has shifted to fear with the break and breadth really collapsed with the crash in the IWM/RSP markets. While fear is showing up, there are any number of troubling indicators including the reality that Berkshire has moved to such high cash levels.
At the same time, banks (which are holding large amounts of toxic debt) have reached extremely low levels of cash.
Also, insiders have been liquidating on the last surge.
Not only did Consumer Sentiment jump to an eight-month high, investor sentiment is now the highest in history.
NVDA also traded an outside day up on Friday, it is down -9.52% off the highs and the daily has a H&S top pattern forming. The neckline is this past week’s trading low at 126.86 and closes under this area would signal targets in the -$100 area (the summer lows.) The MAG7 has a spike high while remaining one of the strongest charts. Even Bitcoin took a hit as it traded back toward the monthly lows in volatile trading. McClellan Oscillators are validating the lows in the Dow and potential trend change. The VIX exploded mid-week with it hitting the highest levels since the flash crash in August during the “Yen-unwinding” trade. The Yield Curve set the highest weekly close since turning positive, ending the week at +0.221% while the 10YR is back above 4.5%. Truflation has moved above 3%. High Yield Credit spreads have moved back to levels last seen at the Great Recession.
10YR-2YR Yield Curve Weekly
VIX Weekly H-L-C
The VIX soared mid-week above 26 and closed at 18.36 toward the lower half of the weekly range. The US Dollar rallied sharply to the highest levels since late 2022 and closed at the highest weekly close since 31 October 2022.
Nasdaq 100 Weekly H-L-C
52-Week A/D Line
Breadth was mixed, decent for tech stocks but bad for the secondaries. Sentiment shows fear.
CNN Fear & Greed Index
AAII Investor Sentiment Survey
Sentiment leans toward fear. The CNN Fear and Greed Index moved into Fear. Breadth was mixed but the McClellan indicator moved to a new low for 2024 extreme fear. Latest AAII Sentiment Survey: Neutral Sentiment Rises. The Dow A/D dipped to 6686 with the MACD confirming the selloff. The VIX ended in the lower 50% of a wide weekly range. The Put/Call is at 0.69 and reads fear. The 52-week, A/D moved down to +1.72 and now reads extreme fear as it is testing the lows for the year. The Dow closed the week down -2.25%, closing in the lower half of the weekly range. The S&P was down -1.99% in the lower half of the range after trading to a five-week low. The Nasdaq Composite was down -1.78% and the Nasdaq 100 was down -2.25%. The FANG fared the best, closing down -1.26% in the lower half a reversal after setting a record high near 14K. The Russell was down sharply, closing down -4.45% on the bottom of the weekly range at a two-month low. The 10-year notes closed lower on the bottom of the range at the lowest weekly close since 28 May 2024. The yield on the 10YR closed the week at 4.53%.
The CRB Index was down -0.60%. Crude oil closed lower, on the lower end of the week’s range as prices have narrowed into an extremely tight eight-week trading range of 7228/6661. Gold was lower all week and closed in the middle of the week’s range. The CoT for the S&P 500 shows speculators liquidating with commercials and small speculators adding. The CFTC S&P 500 Non-Commercial Net Positions is just under -40K which still signals short selling. The non-commercials position is back out to nine-day window.
Timing Points
Friday marks minor timing. Merry Christmas.
- 12/27 **
- 12/30 ***
- 01/03 **
- 01/09 ***
- 01/14 *** X critical
Dow Jones Industrial Average
Dow Jones Industrial Average Hourly H-L-C
The Dow traded to a six-week low and, as outlined above, the action on Wednesday looks impulsive and could be indicative of a trend change. If that is the case, the low on Friday might only cap the first wave down, meaning a continuation through those low could be more formidable. Sentiment has leaned to fear so an overly bearish posture requires caution. The daily is oversold again with the slow stochastics lower than the November trading low. The weekly is still overbought and hooking lower with a bearish divergence. The hourly ended the week basically neutral/overbought. The 200-day MA starts the week at 40959.
Dow Jones Industrial Average Weekly H-L-C
Support short-term is at 42795, 42681 and 42554/42533. Under 42533 should test 42459 with critical/pivotal near-term support at 42146/42123 and critical short-term support at the 41933/41925 level. Closes under 41925 should test 41647 and 41263 through 41192. Closes under 41192 opens counts toward the 40000/39993 area.
Dow Jones Industrial Average Monthly Inflation Adusted
Resistance is 43264, 43609 and 43955/43960. A breakout over 43960 should test 44341 through 44382. Closes over 44382 set up a retest of the intraday trading highs against the 45073/45074 level. Closes over 45074 opens counts toward 45244 and 45426 (Fibonacci target). Rallies with closes over 45426 will reopen longer-term monthly targets in the 47400 level with targets of 46568 and 46954.
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S&P 500 Cash Index
S&P 500 Index Weekly H-L-C
S&P 500 Index Daily Candles
The S&P traded a wide outside day up on Friday, recovering a big chunk of the losses recorded on Wednesday, closing in the lower end of the weekly range. The daily is oversold and weekly remains overbought with bearish divergence showing. Prices traded a six-week low and entered the large gap area left on 6 November 2024. All the post-election trade remains in a separate island above that gap while prices have now taken out the steep trendline in the large rising wedge pattern on the daily. The 200-day MA is 5535.
S&P 500 Index Hourly H-L-C
The hourly relieved deeply oversold conditions and ended basically neutral on Friday. Prices were able to recover 50% of the initial decline before selling off late to settle under that area. Support is 5907 and 5889/5887. A breakdown under 5887 can test 5868 with counts to 5832/5825 and potential to carry toward the 5662 level. Closes under 5662 setup 5526 with potential to critical short-term support of 5391/5388. Daily closes under 5388 sets up 5240/5224 with full counts to 5120/5119.
SPY Weekly
Resistance is 5966 and pivotal at 5997/6000. A drive back above 6000 sets up 6034/6036 with potential to carry back to the intraday highs at 6095/6100. Above 6100 should see 6115 and ultimately 6152. Closes over 6152 open counts to 6224 and 6296. Above 6296 can carry to 6368 with counts into the 6440 area. Closes over 6440 will open counts to 6584. A breakout over 6584 sets up 6638 and 6692.
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Charts courtesy of CQG, Inc., CNN, Koyfin, Trading View and AAII
