Market Update Into September 6th: Ugly Monthly Candles
Though the month of August started out strong, it concluded by giving up everything that had been gained, and some. Though important swing low pivots held into the end of the week, there is a strong case setting up for two very different possibilities. The first, more bullish, is that inverse head and shoulder patterns are potentially forming on the daily time frame and markets are poised to bounce in the near term. The second, more bearish, is that the monthly shooting star candles are signaling quite more downside to come. Which way price will go in the coming weeks is yet to be seen, but it’s likely there will be much speculation and conversation about markets over the grill this long holiday weekend. Let’s dig into the individual names below.
This week, the $SPY ETF closed at $392.24 (-3.23%), just barely finding support at a key pivot low swing level. Just below this week’s close lies the aVWAP from the Covid low, which could be a last-ditch support zone that, if failed, will open the door to quite lower prices.
This week, the $QQQ ETF closed at $295.17 (–3.99%), finding support at the same spot as $SPY, the key swing low pivot level. Much like the other indices, the monthly shooting star candle is not a good look for bulls and it will take some major strength in the coming weeks to gain back what was lost during the back half of August.
This week, the $IWM ETF closed at $180.09 (-4.70%), just barely managing to front run the pivot low that the other indices bounced off of. The monthly shooter paired with price below the aVWAP from Covid low does not set a good scene for the weeks and months to come, and now the next level of potential support could come into play.
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