Bearish Targets Were Reached, What's Next?
The market is at a critical juncture, will it manage to avoid further decline? Or will the fall continue? - Strategic outlook and potential trading opportunities
In the previous Weekly Compass, several key price targets were identified. For the SPX, the bearish target was $5,827, and the week's low was $5,829, just $2 away from the second weekly support, which coincided with the 20-week moving average.
The NDX bearish target was precisely hit at $20,800, matching the week's low. For IWM, the bearish target was $215, with the week's low reaching $217.8. SMH had a bullish target of $252.7, and the week's high was $252.3. This level of accuracy is noteworthy, and this publication analyzes constantly many securities, providing a menu of alternatives so you can take decisions based on your preferred ones.
The Dow Jones bearish target was $42,548.1; the actual low was $42,174. While it performed better than initially anticipated, the bearish formation remains.
GLD's bullish target was $244.8, and the week's high reached $245.5. For SLV, the bullish target was $27.1, and the week's high was $27.2.
$73 was highlighted as a likely level for PLTR, with the week's low at $72.4. Finally, TSLA, along with AAPL, GOOG, MSFT, and AMZN, were analyzed as bearish and their price action moved accordingly, while NVDA was given a bullish target of $141.1, with the week's high reaching $144.9. This also presents the neutrality of this publication, some securities have bullish setups and others bearish ones, that’s the market nature.
Bitcoin was expected to consolidate, and its pullback was less severe than anticipated, reaching a low of $91K against a target of $88K for the week that is ending.
This consistent accuracy provides valuable insight for navigating the markets. For investors seeking an objective data-driven edge, subscribing to SmartReversals is a no-brainer.
If you’re coming back from holidays, or if you recently upgraded your subscription, these are the latest publications. The S/R levels with the monthly ones updated, Fundamental Analysis for Aerospace, and educational content about using Support and Resistance levels.
This edition presents three charts open for everyone (DJI, IWM, and SMH) to give new free subscribers a sense of SmartReversals’ analysis. Those three securities and the following ones are permanently included in this publication every week, consistency is one of my pillars: SPX, NDX, TSLA, Bitcoin, NVDA, AAPL, GOOG, MSFT, META, PLTR, AMZN, TLT, GLD, NAT GAS, DXY, and SLV. Totaling 19 charts that you can count on every week, plus others that help to analyze volatility (VIX), and stock participation (Breadth charts).
This edition also brings monthly charts for the most relevant setups in that timeframe.
Let’s begin.
DJI
Setup: Bearish, including a short term bounce before further decline
Considering: A bullish reversal candle has formed at the 20 weekly moving average (20MA) and is bouncing from the annual central level zone at $41.7K. However, the bullish setup is weak due to low weekly volume and small-bodied doji candles on the recent 4-hour and 2-hour charts. Similar dojis preceded declines following the green close on December 26th. The bearish MACD crossover is very recent.
Price has to stay above this key level next week to consider a bullish reversal in play: $42,961
The current target for the potential short-term bullish reversal is $43,405, but watch out for $43,254; that monthly level could reject price action.
Target for a bearish continuation if the key weekly level is breached: $42,548
IWM
Setup: Bearish exhaustion, technical bounce is possible
Considering: Two consecutive indecision candles (weeks) in a row, a fast oscillator like StochasticRSI is oversold already (not in chart), and the 20MA is holding price as it has done it during a year already.
Price has to stay above this key level next week to consider the bullish thesis: $222.4
The current target for the potential bullish setup is: $226.9
The target for a breach of the key level is: $219, with possibilities to reach $217, the annual central level for 2025.
The yellow ovals highlight the predictable pullback for small caps after breaching the upper Bollinger Band. This prompted a bearish outlook on IWM during the last week of November as highlighted in this publication with accuracy, and since then, price has found potential support only at the central annual level for 2025, similar to last year when $187 was visited (the central annual level for 2024). However, a key difference between the two pullbacks is the MACD: it was bullish a year ago but today it is bearish, based on the respective crossovers highlighted.
SMH
Setup: Bullish
Considering: As mentioned last week, when price consolidates for a considerable time in a narrow range a volume shelf is built, and it can become a launchpad. The 40MA continues carrying the bullish trend. The latest candle is bullish, with the same encrypted warning that most of the securities present: dojis in the 2H and 4H timeframes*.
Price has to stay above this key level next week to consider bullish continuation: $248.5
The current target for a bullish continuation is: $255.7
If the key level is breached next week, the target would be: $244.7
SMH demonstrates the significance of annual levels, with the 2024 lows bouncing precisely at $200.4 and the high matching the annual resistance level of $278.6. 2025 Annual levels for all securities will be updated soon in a special edition.
(*) How to analyze the potentially bearish doji star in the 4H and 2H timeframes? The answer is below in the NDX analysis.
SPX