Stock Market Analysis - 3/10/2020
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The past 2 days of trading have been quite spectacular. We started Monday with a quick 7% limit down, recovered, trapped bulls, then collapsed again closing at the LOD. Monday's price action was fueled by continued Coronavirus fears over the weekend and collapses in world markets before the US open. Today we had the complete opposite price action and closed near HOD printing a Hammer on the Daily Chart. The end of day push today was fueled by possible payroll tax cuts and the Trump Administration's continued support of the US Stock Markets. Monday's price action showed us that although technical analysis is a good predictor of future price action, it cannot predict significant breaking news releases. The current market condition are unpredictable and volatile with lots of overhead news risk.
The first thing I want to note on the Daily chart of SPY is the RSI divergence. Although SPY made new lows on Monday, RSI did not make a new low. This is the first evidence of a possible bottom.
On the 30m timeframe, we managed to hold the 273.50 lows three times before breaking through resistance at 285 and the down sloping trendline on high volume. This was impressive price action for a bullish case however I would be careful. SPY is still below the 5DMA (Short term trend bearish) and there are some strong overhead resistance SPY still needs to get above to show strength. If SPY can break and hold above 294, I think this could be the start of a bullish trend.
The first thing I want to note on the Daily chart of SPY is the RSI divergence. Although SPY made new lows on Monday, RSI did not make a new low. This is the first evidence of a possible bottom.
On the 30m timeframe, we managed to hold the 273.50 lows three times before breaking through resistance at 285 and the down sloping trendline on high volume. This was impressive price action for a bullish case however I would be careful. SPY is still below the 5DMA (Short term trend bearish) and there are some strong overhead resistance SPY still needs to get above to show strength. If SPY can break and hold above 294, I think this could be the start of a bullish trend.
Nota
QQQ showed similar price action and closed bullish. Watching the 206 area where the Anchored VWAP from previous low and the 5DMA are aligning. Nota
Weakness in IWM continues as today's strength in SPY and QQQ did not flow into IWM. IWM is still in a downtrend and did not print a higher high like the rest of the indexes. Avoid...Nota
Despite the strong up day in SPY and QQQ, VIX did not fall off the cliff yet and looks like it is consolidating. VIX is showing the volatility is here to stay for awhile. A wedge pattern is forming at highs. 
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