Stock Markets Follow Through on Monthly Reversals

These are scary times from a humanitarian standpoint due to the coronavirus pandemic.  At the same time, these are exciting times for active traders.  I’m not trying to minimize the human situation (I’ve been affected by the pandemic) but life does continue, social distancing or not.  At SB, we’re lucky because our ability to work is for the most part unaffected.  We’ll be posting our research and ideas everyday.

The following from the 3/1 SB Swing Update is the kind of original insight that you can expect from SB.  If you had read this a month ago, you’d probably be a little less stressed right now.  It was a fun ride on the way down and current conditions are conducive to big swings in both directions in currencies, indices, and commodities (we’ve been nailing gold turns lately).  You may have more screen time than usual so join us!

-Jamie Saettele

@JamieSaettele

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3/1 SB Swing Update

S&P 500 (ES) FUTURES MONTHLY

S&P 500 (ES) Futures Monthly

February has produced major sell signals in the major U.S. stock market averages.  My volume reversal logic can be applied to any time frame and February has produced monthly volume reversals for major U.S. stock market averages.  For the S&P 500 (ES), this is the first monthly bearish volume reversal since 2007.  For the Dow (YM…next chart), this is the first monthly bearish reversal since October 2018.  The one prior to that was in 2007.  A monthly bearish reversal also triggered in XLY (2 charts down), the consumer discretionary ETF.  Here too, the previous reversal was October 2018 and the one before that was in 2007 (month of the top).  Consumer discretionary is one of the most important, if not most important, sectors to the U.S. market.  AMZN is 26% of XLY (see chart of AMZN compared with XLY…3 charts down).  There will be sharp rallies that last days and even weeks but too much damage has been done for this to be another ‘buy the dip AND hold’ opportunity.  Game over.

DOW FUTURES (YM) MONTHLY

Dow Futures (YM) Monthly

XLY MONTHLY

XLY Monthly

XLY AND AMZN (MAGENTA LINE) MONTHLY

XLY and AMZN (magenta line) Monthly