A Potential Break in the 50-DMA and Where to Look Next

September 8, 2020

Mish's Daily

By Mish Schneider


Mish’s Daily written by Forrest Crist-Ruiz. Assistant Dir of Trading Education and Research

Last Friday we noted how major symbols (QQQ, IWM, JNK,SMH) bounced off the 50-DMA. Now with the market still undecided, we can build a plan on what to look for if we break under the 50-DMA.

Let's take a look at the QQQs and the SPYs on a daily chart below.

blank

 

 

blank

Here we can see that while the QQQs have settled down almost perfectly on the 50, the SPY has a little more to go.

With a break of the 50 we then would look for a second day to close under the 50-DMA.

This is very important because the second day is confirming a caution phase change. Many times a moving average is broken, but the security closes higher the next day.

If both symbols break and confirm this makes a stronger case for the continuation down.

You might then think “Well great! Now we see prices confirming a breakdown, where might the price go next?”

Ahh I’m glad you asked. If we have convincing closes under the 50 bringing us further away from the 50-DMA the next point of interest would be 260 for the QQQS and 323 for the SPY.

These prices are right at the 17-Week Exponential moving average for both symbols.

This leaves the QQQs in a prior consolidation area, and the SPY in a prior consolidation area with support from June’s highs.

We can never be 100% sure what the market will do but looking for past support areas and key indicators can help us prepare immensely!


blank
Get your copy of "Plant Your Money Tree: A Guide to Growing Your Wealth"
and a special bonus here


S&P 500 (SPY) 329 support

Russell 2000 (IWM) Broke 50-DMA watching for a continue

Dow (DIA) 271 support

Nasdaq (QQQ) Sitting on 269 50-DMA. Watching for break lower.

KRE (Regional Banks) Also sitting on 50-DMA

SMH (Semiconductors) Next support 159

IYT (Transportation) Watching for a break back over the 10 DMA with resistance at 203

IBB (Biotechnology) Watching for support at 124

XRT (Retail) Next support at 50-DMA 48.00.

Volatility Index (VXX) Broke 50 and 200-DMA. Watching for continue

Junk Bonds (JNK) New Sitting on 50-DMA. Watching

LQD (iShs iBoxx High yield Bonds) 134.56 next support

GLD (Gold Trust) Held 180 support. A close over the 10-DMA would be nice.

GDX (Gold Miners) Holding onto the 50-DMA. Can it get back over?

SLV (Silver) 23.00 support and watching

USO (US Oil Fund) Large break-down with news of price cuts.

UNG (Natural Gas) Did not clear 14 and broke-down.

TLT (iShares 20+ Year Treasuries) Watching to stay above 10-DMA

USD (Dollar) 10-DMA resistance Closed under 50-DMA watching for confirm.

VNM (Vietnam) Held the 10-DMA

JO (Coffee) Still looks good

CANE (Sugar) Ended the day green. Watching to clear MAs

Soybeans (SOYB) Closed higher

DBA (Agriculture) Needs to continue higher passing the Mas.

Improve Your Returns With 'Mish's Daily'

Michele'Mish' Schneider

Every day you'll be prepared to trade with:

  • Unique insight into the health and future trends in markets
  • Key trading levels for major ETFs
  • The 'Modern Family' advantage
  • Actionable trading ideas in stocks and ETFs across all asset classes
Subscribe Now!

Leave a Comment or Reply

Your email address will not be published. Required fields are marked *