The DOW in March, early May and late June.
The S&P in February, early April and early May.
The NASDAQ in February and early April. The NDX in February, mid April and late April.
What do these dates have in common? For these major indices, it was the dates that each held the all-important 200 day moving average. This moving average is a longer term moving average that if broken, look out. It is a point that defines bull or bear.
Guess where all these indices are sitting in and around right now? Correct…the 200 day average. A couple are just above with a couple just below.
WE CANNOT BEGIN TO TELL YOU HOW IMPORTANT A HOLD WOULD BE HERE. If it does not hold, the big money would recognize it. The big money would recognize that on several occasions, it was able to make a stand. If broken, it would lead the big money to “give it up”…which means even deeper selling.
Keep in mind, so many other areas have already moved below, some far below. The RUSSELL 2000, the MID CAPS, the TRANSPORTS, the BIG FINANCIALS, the REGIONALS, the METALS/MINING, the MATERIALS, the SEMICONDUCTORS, the many FOREIGN MARKETS….so with so many in such bad shape, the market will not be able to withstand a break from the “BIG 4”.
We walk into another gap to the upside today as earnings season gets into full swing. We believe the big money knows how vital this support is and will do everything to defend. Just keep in mind that even if these major indices hold here, the broad market and the average stock is in much worse shape than these indices evidenced by all the other areas we listed. It is definitely goal-line stand time.
The best looking patterns remain in the asininely valued MARIJUANA stocks. It is not very often froth stays frothy as markets head lower. TILRAY (TLRY) trades with a$17 billion market cap with only $25 million of sales while incurring losses. CANOPY GROWTH (CGC) has a $12 billion market cap with $90 million of sales while incurring losses. That did not stop an outfit from putting a BUY on TLRY this morning. Just remember, in the end, valuation will matter. While froth pervades the air, valuation is thrown out the window. Just remember what we told you about all those coins while they were going parabolic. We know the weed business is different as maniacal governments move to legalize but ultimately, you cannot fit a 10 pound salami in a 5 pound bag. Valuation will matter.