All The Indices Look Bullish, But Gold & Silver Weaken
The major indices are looking bullish again. The small and midcaps have shown a bullish character change. Gold and silver prices have been falling.
Summary
All the indices are looking strong.
The S&P 500 and NASDAQ 100 have recovered from the April crash. Both are above the 50-day moving average and almost above the 200-day moving average.
The Dow Jones Industrial Average closed at the 50-day moving average.
The S&P 400 MidCap and Russell 2000 are above downward trend line and have shown a character change.
Gold and Silver are in a short-term downtrend and both are not buyable.
Berkshire Hathaway continues to be in the hold zone and at the last high price.
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Market Review
Let's review what happened this week in the stock market.
S&P 500 · SPY
On Thursday, we saw the price break above the 50-day moving average, which is a good sign.
On Friday, we saw a follow-through where it moved higher. It started above the close and it ended higher.
This is a very good sign of strength.
The price is now very close to the 200-day moving average.
On the weekly chart, we see the price getting very close to the parabolic SAR dot.
This is a very good sign of strength because once the dot moves under the price, it acts as support and increasing the likelihood of the price moving higher.
Also, we see in the weekly chart that the price opened above the last low right before the market sell-off.
Now the price is more than halfway above the low before that.
All signs are pointing to strength in the S&P 500.
NASDAQ 100 · QQQ.
The QQQ also opened above the 50-day moving average on Thursday and it followed through higher on Friday.
The price did touch the 200-day moving average line on Friday. It did close slightly below it.
On the weekly chart, the price did touch the parabolic SAR dot that was above it and now it has moved under.
The dot is now at the low of the crash from the week of April 7th.
This is a very good sign of strength because now we have support on the parabolic SAR.
All the signs are pointing towards strength in the QQQ.
Dow Jones Industrial Average · DIA
The DIA closed right at the 50-day moving average line on Friday.
It is still a little bit away from the 200-day moving average line.
On the weekly chart, the price is still quite a ways away from the parabolic SAR dot.
But as we can see, the price did close above the downward trend on the weekly chart and on the daily chart.
The Dow Jones is more defensive than the QQQ and the SPY, so it will move a little more slowly.
But this one is showing signs of strength as well, but not as strong.
Typically, growth stocks like the QQQ and the SPY tend to move faster in a bullish market.
S&P 400 MidCap · MDY
This has definitely shown a character change.
As mentioned in previous posts, it has been in a downtrend since December of last year.
The market sell off seems to have created conditions to allow it to do a character change with the rest of the market.
It has been following this upward trend line and on Tuesday and Wednesday tested trying to break above the downward trend line.
On Thursday, it definitively broke above the downward trend line and the last low before the market selloff and it opened much higher on Friday.
On Friday, the price opened above and stayed above the 50-day moving average line.
It's still quite a ways away from the 200-day moving average line.
In the weekly chart, the price did touch the parabolic SAR dot that was above.
Now, it has moved below the price around where the market low was during the selloff.
This is another sign that the mid caps are doing a character change and looking way more bullish than it has been since December of last year.
Russell 2000 · IWM
It opened around the 50-day moving average line and closed above it.
It also on Friday kept above the last low before the market selloff.
It is much further away from the 200-day moving average than the other indices.
Another indicator that the small caps are showing a character change is that the price touched the parabolic SAR dot and now it has moved below the price (around where the market selloff low was).
Just like the mid caps, the small caps also are showing a character change and looking much more bullish than they have been since last year.
Gold · GLD
We have been mentioning that when the price gets into the hold zone, it is best to avoid buying new positions and look for a different entry point.
The reason is the price could be overextended, or it could fall; it is no longer an optimal buy zone.
As we have seen since almost two weeks ago, the price hit a peak and has been in a slight downtrend since.
So far it looks like a small correction, but it is indecisive whether it is a top or a bottom.
The price is still a little bit away from the 50-day moving average so it is holding that support.
The 200-day moving average is much further away.
On the daily chart, the price has touched the parabolic SAR dot that was below the price and the dot has moved above it.
Now there is short-term daily resistance.
We will know if the price has reached the top if the dot that is currently below the price reaches the current price.
If we see another week or two of continued down prices, the price and the dot should meet and the dot will move above the price and act as resistance.
In conclusion, gold is still not a buy.
It may be presenting a new buy opportunity in the coming weeks.
Silver · SLV
Either last week or in the previous video, we mentioned that silver did enter the price zone.
We did mention that silver entered the buy zone, but the price action wasn't looking as strong as it could be and to watch it.
So on Tuesday, the price started a short downtrend following a similar price pattern that gold has been following.
It reached a peak around the same time that gold reached a peak the middle of two weeks ago.
And it seems silver has found a similar peak just on a four-week basis and has been following a similar downtrend as gold has, just not as sharp.
Silver does not move as quickly as gold.
The price did fall below the 50-day moving average on Wednesday and has stayed below since.
So right now the price is below the 50-day and the buy zone, so it's not time to buy yet.
There may be an opportunity to buy for aggressive investors.
Just keep an eye on it to see if it develops.
Berkshire Hathaway · BRK.B
The price is at the top of the price is at the top.
The price is at the last peak from April 2nd.
The price is still in the hold zone as well.
We had shared some buy opportunities in previous videos when the price dipped into the buy zone, and when it dipped again into the chase zone.
For those of you that are holding and took advantage of these buy opportunities as a result of the stock market sell-off, congratulations!
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Terminology
Buy zone: The optimal price to buy. Investors would get the best long term gains in this zone.
Hold zone: The price is above the buy zone. Investors could continue to dollar-cost average (DCA) in this zone, but risk less optimal long term gains.
Warning zone: The price has lost momentum and is below the 50-day moving average. Investors should consider whether they feel comfortable holding or planning an exit.
Danger zone: The price has lost support and the potential for lower prices is much higher. Investors could hold for the long term as long as the 50-day and 200-day moving averages are not sloping downward. Ideally investors should consider exiting and buying again when the price has gained support and momentum.
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Disclaimer: The author is not a financial advisor. The information provided herein is not financial advice and should not be construed as such. This content is intended solely for educational purposes. The author will not be held liable if you decide to used this material as a basis for any financial decision-making. Investing involves risk, including the potential loss of your invested capital. Only invest what you are willing and able to lose.
I used turboscribe.ai to create the transcription below and did some editing.