Why I Think We Keep Going Down: No Outcome in Q2 is Bullish
No matter where we are on June 30th, price will confirm a sell signal.
Lots of people texting me over the weekend that they’re bullish.
That’s great, and I agree that the market is due for a pop, but…
I’m not bullish. At all.
Why?
Because no matter which way the candlesticks end up this quarter, it will be bearish.
Let me explain. Here is a look at the best bell weather for stocks, the S&P 500… each candle represents 3 months (i.e. a quarter).
Q1 formed a Bearish Engulfing on the charts. This signals lower pricing, but needs confirmation. What a bearish engulfing means is that the market GAPPED up on January 1st, only to close LOWER than the open on October 4th (the last green candle). In other words, price action for Q1 “engulfed” Q4… very bearish because it’s a huge sentiment shift.
Looking at the latest candle…. which has yet to complete…
Q2 opened on April 1st at 557.45.
If we close at 557.45 on June 30th (when the Q2 candle forms), we will have formed a Bearish Dragonfly.
If we close at the highs of the quarter (567.42) or higher, we will have formed a Bearish Hanging Man.
If we close where we are today, or lower, it will be a bearish continuation.
No matter where we are on June 30th, it will be a bearish signal CONFIRMING the Q1 Bearish Engulfing of Q4 2024…
“What if we rally above the highs of Q1?” - if that were the case, it would be a “melt-up”, in and of itself a bearish signal. In other words, if we rally super hard, it will be a sell signal Melt Up.
If you’re playing it long, be nimble. Take profits if you’re up. If you’re a long term investor, dollar cost average your way in over the next few months.
Me? I remain short by going long Put LEAPS on tech NVDA 0.00%↑ MSFT 0.00%↑ META 0.00%↑ NFLX 0.00%↑ TSM 0.00%↑ AMZN 0.00%↑ IOT 0.00%↑ XLK 0.00%↑ QQQ 0.00%↑ SMCI 0.00%↑ DKNG 0.00%↑
And I’m long call LEAPS on X 0.00%↑ and CENX 0.00%↑ and UNG 0.00%↑