Breaking News
0

Stocks Appear Poised To Rally Back To Their All-Time Highs

By Michael KramerStock MarketsAug 20, 2019 09:37AM ET
www.investing.com/analysis/stocks-appear-poised-to-rally-back-to-their-alltime-highs-200456672
Stocks Appear Poised To Rally Back To Their All-Time Highs
By Michael Kramer   |  Aug 20, 2019 09:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

It seems that the market is feeling a little bit better these last few days since the significant “inversion” last week. Has anything changed since any point last week? Certainly not in a meaningful way. So why are stocks suddenly feeling a little bit less fearful? Well, because the yield curve steepened by ten basis points or so since Wednesday, with the 10-2 year rising to around ten basis points intraday on August 19. Wow.

US10Y-US2Y Weekly Chart
US10Y-US2Y Weekly Chart

Again, I have said over and over again, the yield-curve inversion is meaningless at this point. Inversion for one second on some random day is not a recession trigger or signal. If the yield curve were inverted by about 25 to 50bps for the next six months, I’d be more concerned. But for 10 seconds? It means nothing. Look, the proof is right in front of you.

S&P 500 (SPY (NYSE:SPY)

Anyway, the S&P 500 rose to around 2,925 and was stuck there. It sets up what may be a massive make-or-break moment for the equity market tomorrow. The index rose to a high of 2,931 and is closing in on a break out, which could send it back to its all-time highs.

The S&P 500 appears to have formed a triple bottom, a bullish reversal pattern. That is when a stock or index falls to a level of technical support on three occasions and doesn’t continue to decline, leading to a reversal higher. In this case, that support level was at 2,825.

To add an exciting twist. The index has already formed a triple top, after three successive attempts to rise above 2,935. A triple top is the mirror image of a triple bottom and is a bearish reversal pattern.

I haven’t seen this scenario many times in the past unfold like this. But given that index has already failed at 2,935, and has managed to reverse off of support at 2,825, I believe that the index will rise above resistance this time at the 2,935 level, and move higher back toward its all-time highs of around 3,025.

It is a bold call, I know. So that is why failure at 2,935 would be a terrible sign, and I would be anxious that support at 2,825 on the next move lower would not hold, and result in a retest of the June lows.

That is how important this make-or-break moment is for stocks.

S&P 500 Index
S&P 500 Index

Another reason I am optimistic is the S&P 500 can head back its highs is that the relative strength index has been trending higher after hitting oversold levels on August 5, falling below 30.

S&P 500 Daily Chart
S&P 500 Daily Chart

VIX (VIX)

Volatility S&P 500 Index
Volatility S&P 500 Index

The VIX also serves as a bullish sign for the equity market. It appears to have formed a bearish reversal double top pattern and has now fallen below support at 17.5. The VIX should continue to drop, and that should push equities higher, as investors once again begin to short-volatility and go long the S&P 500.

Netflix (NASDAQ:NFLX)

Netflix (NASDAQ:NFLX) had a good day, and I noted today in a write-up for subscribers that I saw some bullish betting in the stock. Technically the stock looks strong too, and it could be on a path toward $321.

Netflix Chart
Netflix Chart

BTW, I saw the news about Apple (NASDAQ:AAPL) and its content plans of spending $6 billion. I think it is a non-event for NFLX. I do. There will be plenty of money to go around as people cut out their cable bundles. Which is why I own NFLX, Walt Disney Company (NYSE:DIS), and AAPL. The losers will the cable providers.

Apple (NASDAQ:AAPL)

Apple Inc Chart
Apple Inc Chart

Speaking of AAPL, the stock is breaking out rising above resistance at $209.50 and could be on its way to around $217.

Nvidia (NASDAQ:NVDA)

NVIDIA Corp Chart
NVIDIA Corp Chart

Nvidia also had a good day, rising above resistance $171, I think the stock has a little more to climb from here, maybe to around $175 to $180.

GE (NYSE:GE)

GE Co Chart
GE Co Chart

GE is having a tough time at resistance around $8.80, and I saw a bunch of bearish option betting in this one on Friday. GE: More Bearish Bets Piling On

Alphabet (NASDAQ:GOOGL)

Alphabet Inc Chart
Alphabet Inc Chart

Alphabet (NASDAQ:GOOGL) is testing resistance at $1205, and I think it breaks out and heads toward $1225 and toward its highs.

Original Post

Stocks Appear Poised To Rally Back To Their All-Time Highs
 
Stocks Appear Poised To Rally Back To Their All-Time Highs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
jim boblooch
jim boblooch Aug 20, 2019 1:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email