Muted Week for SPX and NDX in Overextended Rally
It's the second week showing signs of reversals - Bottoming is an event while tops are a process, is this the case?
Technicals are overheated, and price action ended muted the week
During the last month, IWM and DJI moved down in consistency with bearish reversal charts analyzed in this newsletter. During the same period SPX and NDX continued moving up, mostly because the A.I. euphoria, good CPI news and other mega-caps that continued moving up.
The low seasonality that is common during the last two weeks of June did not happen, but it’s worth noting that the rally attempts found rejection when zooming out and analyzing the weekly candles.
Breadth indicators have shown low stock participation, meaning that this rally has been dependent of a a portion of the companies listed in the indexes mentioned, so once those companies retrace, the market is expected to do so.
AAPL found rejection at the exact level forecasted as target of the rally; NVDA declined by 13% and the bounces have been rejected as we will study below.
Bitcoin continues moving down as the setup has been indicated for more than a month, and the European indexes are struggling to bounce, today their charts suggest a resume of the decline.
Remember that no move is expected to be in a straight line up or down, and outcomes from weekly setups have to be analyzed when the following weekly candle is closed; the bearish shooting star anticipated last week for NDX was validated until the following Friday with a bull trap at the opening.
Let’s go to the charts, the weekly ones are strong enough in most of the cases, and there is one bullish monthly chart that only paid subscribers saw during the last editions, that setup is working out well.
A note about when or what for I use monthly charts:
You may remember the educational content about Price Action, there is a type of candles called “Tweezers”, they look like an unexpected reversal and they’re common