Technical Approach that Outperforms the Stock Market
Support and Resistance Levels for June 2nd - 6th
Many people aspire to use the "buy and hold" strategy, but often their "buy" phase begins when the stock market is in a strong uptrend, driven by euphoric news and widespread bullish sentiment. This typically coincides with the market reaching overheated conditions. Consequently, the "hold" part of their strategy tends to be postponed once the market starts to decline.
Technical analysis help investors to time the market, yes, it is possible when you are disciplined and can manage your emotions, the following chart for the S&P500 highlights clear reversal signals using the monthly chart.
The red arrows on the chart points out indecision candles that have consistently preceded significant stock market corrections. The first instance marked led to the 2018 bear market, followed by the COVID crash, then the 2022 bear market, and most recently, the 2025 tariff war. While the chart contains other indecisive candles, those specifically highlighted were followed by declines that pushed the price below the 5-month moving average, as indicated by thin arrows. Simultaneously, as shown by black arrows in the sub-chart, the Stochastic oscillator crossed below the 80 level, confirming overbought conditions had dissipated.
Regarding the Relative Strength Index (RSI), its overbought threshold is 70. A key warning sign, known as divergence, occurs when the RSI sets lower highs while the price itself continues to set higher highs – a condition that typically foreshadows pullbacks.
Similarly, bullish reversals are highlighted by green arrows, representing bounces from the 50-month moving average and bullish candles that either bounced from that level or formed a bullish setup, as seen in September 2024. The sub-chart also features an arrow indicating the Stochastic oscillator crossing above 20, which validated the bullish reversal following the 2022 bear market.
For educational content about the technical indicators mentioned, click on each link according to your interest: Stochastic and RSI oscillators, Candlestick patterns, Moving averages, and Support and resistance levels. Additionally, there are more indicators that I use in my regular analyses, such as Bollinger Bands, Volume Profile, and the McClellan oscillator. For the complete library, including studies of reversals and technical patterns in the stock market, click here.
While looking at the chart in hindsight makes it appear logical, living through its real-time movements – listening to news or social media, watching futures during extended hours, and constantly checking the chart throughout the trading day – makes emotional management significantly more challenging.
This publication offers an in-depth analysis of technical indicators for over 20 securities. I utilize the appropriate indicator to determine the most probable scenario: whether that's a bullish reversal, a bearish reversal, continuation of a trend, or a consolidation phase preceding a major move. For instance, the monthly chart for the SPX, presented above, clearly indicates a bullish trend, with significant probabilities of reaching all-time highs within the next month or two. However, when zooming into shorter timeframes, there's a chance for a short-term pullback, as the price has been in consolidation mode over the past few days.
This weekend's publication features crucial charts in monthly timeframes, including Tesla, Nvidia, the Nasdaq 100, and a particularly intriguing one for Microsoft. Naturally, these are presented using my preferred timeframe, which effectively mitigates minor fluctuations and has consistently proven to be the most reliable reference for monitoring price action. Subscribe now to ensure you unlock this key information.
Given that emotions can often derail even the most disciplined strategies, every Friday I meticulously model support and resistance levels for indices, stocks, ETFs, crypto, and metals for the week ahead. This means these lines aren't based on simple historical diagonals, but rather on high probabilities of future price action moves. For instance, the SPX reached its bullish target of $5,925 on Monday, subsequently retracing over the following days. Today, the price bounced precisely from $5,846, the central weekly level that, if breached, validates a bearish reversal. Similarly, the QQQ hit its weekly high in premarket hours on Thursday, finding exact rejection at $530 – a resistance level shared with premium subscribers a week in advance. Today, the price also bounced from $512, the central level for big tech.
The examples continue: IWM encountered rejection at $208.3, its bullish target for the week, and today, price action successfully held above $204, the central level for this security. Tesla was rejected at the $365.5 zone, while Palantir convincingly broke above $127.9, settling precisely at the $132.4 zone, which was the next resistance anticipated last Friday.
Starting with this edition, the monthly and weekly levels now incorporate non-tech stocks such as Berkshire Hathaway, Eli Lilly, UnitedHealth Group, and Pfizer. Additionally, I've included a semiconductor company that currently exhibits a stronger setup than Nvidia: Broadcom (AVGO).
If you trade one or some of the following securities, this publication is for you: SPX, NDX, DJI, ES=F, NQ=F, SPY, QQQ, IWM, DIA, SMH, TLT, NVDA, META, MSFT, AMZN, GOOG, AAPL, TSLA, NFLX, COST, MSTR, PLTR, AMD, AVGO, LLY, UNH, BRK.B, PFE, GLD, SLV, BITCOIN, ETHEREUM, TQQQ, SQQQ, UPRO, SPXS, UDOW, SDOW, URTY, and SRTY. You don’t have to trade all of them, you just use the ones of your interest.
By the way, UNH, and PFE suggest strong breakups are brewing, the key levels to validate that thesis are below!
WEEKLY LEVELS
As long as the price is above the figures located in the blue column, the bullish setups are still in play, the second chart presents the monthly levels, and the new feature added in this publication combines the levels for the securities charted in the Weekly Compass.