Sunday, June 28, 2020
The Dow, S&P 500 and Nasdaq have all followed my forecast down into the nearest Buy Zones (green entry circle). These are critical inflection zones that need to hold over the coming days. If they begin to fail and start breaking down below these important support levels it is likely we will see Dow 23,000, S&P 2800 and Nasdaq 9675 sometime in July.
If they hold and we begin to reverse higher here and cross over descending blue line resistance I would expect a run back up to Dow 27,000 and possibly Dow 29,000. So, the broader market is at an important junction and the next few days should tell the tale of what lies ahead for the next month or so. Plan accordingly.
Many Nasdaq stocks are at resistance and vulnerable to coming back down into their unique, lower support levels to load up for the next leg higher. They have run a long way from the Corona Crash bottom and really need a reset to help facilitate another surge higher.
Software stocks, my favorites, have just ripped off the March 23rd bottom and looking at the charts of OKTA, TTD, NOW, ZS, ZEN, COUP and the rest of the group it’s pretty clear they are highly vulnerable at current levels.
Nasdaq is currently vulnerable down to 9675 (yellow support) which is about 2% lower than Friday’s closing price. I would look to this ascending yellow line as the next level that should support a reversal higher (if current support fails) and another leg higher repeating the pattern from early April.
My intermediate and longer term outlook remains unchanged; a choppy summer with some volatility going into the election and either a Trump expansion or a Biden collapse.
On a personal note, I am beginning to trim positions and bank some profits. I am more interested in raising cash for potential lower entries and less concerned with missing out on near term gains.
Dow futures (/YM)
S&P 500 futures (/ES)
Nasdaq futures (/NQ)
I’m happy to answer any questions you might have.
Have a good week,
Don