The Stock Market is Ready to Take Direction
After Seven Indecisive Days, a Squeeze is Imminent
After a multi-week rally, the week concluded with indecision, a common characteristic of bounces. However, concerns persist regarding key resistance levels reached by the Nasdaq100, such as the 200-day moving average, especially with ongoing trade tensions, and when the U.S. president said “buy stocks” on Thursday, the market did not react as on April 9th; similar case on Friday when the green action in the futures vanished during market hours.
Seven consecutive indecision daily candles on the SPX is an unusual occurrence, most of them have been dojis, and indicating an extended period of indecision and balance between buying and selling forces. In the context of a potential squeeze, this pattern could suggest a market coiled and ready for a significant move once a catalyst breaks the equilibrium. This publication provides the three main levels to watch in three different indicators, with other “softer” elements to watch.
For today’s analysis there are three readings related:
The Magnificent 7 weigh more than 50% of the Nasdaq 100, and more than 30% of the S&P 500; for that reason, I posted a fundamental update with their financials and business outlook, adding NFLX and PLTR as a plus.:
The second publication mentioned provide a concise historical view of the S&P500 with comparable events to 2025. A pure technical approach based on numbers and probabilities above 90%.
The third publication is about the Support and Resistance levels for next week:
If you invest or trade in some of the following securities, this publication is essential to take informed decisions: SPX, NDX, DJI, IWM, SMH, TLT, VIX, DXY, GLD, SLV, PLTR, NFLX, AAPL, GOOG, TSLA, NVDA, META, BITCOIN, MSFT, and AMZN.
This is intended to cover a broad base of securities keeping the indices as the core; the subscribers who read the bearish calls for the US Indices and stocks in February had access to the bullish calls for GLD and TLT back in those days. Same as the stock investors who read my bullish call on Bitcoin four weeks ago, in the middle of the panic, the cryptocurrency has rallied 21%+ since then.
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SPX: In the previous Weekly Compass, the outlook for the week that just ended included the possibility of a dip to $5,513 followed by a bounce. This was based on two indecisive daily candles highlighted in the chart below, situated near the 200-day moving average, with overbought fast oscillators and a gap at $5,581.
The subsequent days saw the formation of more indecisive candles, including one on Wednesday that experienced a rapid flush and bounce, filling the gap and ultimately closing in the green despite the Federal Reserve's decision to maintain interest rates unchanged. The final outcome for the week did not reach $5,513, which was bullish, but it stayed essentially flat which suggests exhaustion and the need of a consolidation.
The bullish conviction posted last week was supported by a study of previous comparable events, documented on Wednesday, which outlined specific expectations for the following 1, 3, and 6 months. To access the study click here.
The expectation for the week ahead:
The analysis below with the weekly charts details the technical similarities and differences between the recent rally and the bear market rallies of 2022, with the respective conclusions presented in the two SPX charts below. Unlock this in-depth content for SPX, and other 19 securities by upgrading your subscription.