Market Cooling Down: Technical Indicators Signal Potential Decline
Unmasking the Market's Hidden Signals - Breadth Continues Deteriorating and Volume is Drying
The bullish effect of the jobs report faded during the week. This is not surprising, considering several warning signs that the market is overheated, both from a macroeconomic and technical perspective. You can read the latest macro-economic edition for more details:
At a technical level, the Weekly Compass has been posting exhaustion signs arising in the market, such as shooting stars in SPX since October, long time divergences, volume drying and as warned two weeks ago and validated last Saturday, a deterioration in breadth, which refers to stocks participating in a bullish move from an index.
Breadth deterioration and divergences are conditions that can prevail for a couple of weeks, now it’s time to watch triggers, and price action + VIX are giving a gentle warning that a decline in the SPX is brewing. The technical details are presented in this edition as usual.
Winter is Coming? - From the latest Weekly Compass:
Dow Jones confirmed the weakness mentioned last week, the godfather of the indexes has been in decline during two weeks already; IWM also continues moving down consistently with the bearish setup raised here two weeks ago already; Palantir visited the mentioned 5 weekly average and bounced back, be careful, the setup is bearish.
GOOG reached $181, the bullish target shared in this publication; same AAPL exceeding $245; TSLA reached $414, also the target mentioned, NVDA crossed also the bearish target shared in this edition, MSFT reached the $452 target and retraced (a good example of why I provide immediate target and general target); and consistently with the overall bullish targets for tech giants, NDX reached its $21,840 target.
That’s a good summary for everyone about the quality in technical analysis that can be used by both traders and investors! to provide two more examples: this publication raised the bullish signal for Tesla in October before this +100% rally, everybody was bearish on that stock, but technicals were screaming a rally. Last but not least by mid October the bullish setup was announced for Bitcoin.
The last three paragraphs serve two purposes: 1) to highlight the type of analysis provided to paid subscribers, and 2) to demonstrate my objective, indicator-driven approach, particularly as current macro and technical signals suggest a potential market decline. I’m bullish when indicators are bullish, and bearish when indicators are bearish.
This edition brings a special chart with support levels for SPY based on price action, it’s better to be prepared!
If you invest in some of these securities this publication is for you:
SPX, NDX, DJI, IWM, SMH, TLT, GLD, SLV, Nat Gas, PLTR, AAPL, GOOG, TSLA, NVDA, META, MSFT, AMZN, Bitcoin.
Also, the Support and Resistance levels publication include more securities such as: SPY, QQQ, NFLX, AMD, COST, MSTR, TQQQ, SQQQ, UPRO, SPXS, DIA, UDOW, SDOW, URTY, SRTY, so you have more entry and exit levels for bullish and bearish instruments. I included inverse instruments since 2025 is set to bring volatility.
Here we go:
SPX