On Monday I discussed how Crude broke out above its resistance area & downtrend line. I said I would like to see consolidation and the 52 day MA turn back up before considering a long. Well since Monday, Oil has fallen sharply lower falling back inside the downtrend line, while also closing below $57.30 support and once again trading below the 52 day MA.
 
Given the 52 day MA is sloping down already and the setup we are witnessing this price action looks quite bearish at the moment. In the short term I'm looking for potentially a small retracement back to either 57.30 area, or a move back higher towards its downtrend line currently around $58.50.

However after the brief retracement process, I'm looking for Crude Oil to continue to roll over and head for $55.15 support as its first potential area to move towards.
 
Since on a macro level that global Manufacturing PMI's are rolling over at the moment, as well as supply rising from US Oil production its no surprise that Oil is weak at the moment. Since the last down move back a few weeks ago was around $50.60 level, its certainly possible we could reach this area over the next few weeks if we see follow through selling.

More importantly considering the 52 day MA is much lower now than 3 to 4 weeks ago, Crude Oil has the potential to move towards a lower area beyond the June lows.
 
However we are getting ahead of ourselves at the moment, especially considering how bullish US stocks are presently this could come to play on Oil & stocks this week and next since they are closely correlated.
 
Either higher stock prices can support Oil prices despite the bearishness or by forcing stocks to pullback lower in the short term. Its also important to note that on occasion the two assets classes have and can move in opposite directions for a while. But its certainty worth watching closely for the rest of this week.

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Copper continues to remain under pressure as it sits close to the lows reached at the start of Jan 19. The price action is in a consolidation sideways pattern over the last two weeks, as Copper prices in a slowing weak global economy.
 
This contrasts with US stocks over the last two weeks that has seen a large bounce off its recent lows on the prospects that Powell & the FED are now looking cutting rates in 2019. The prospect of rate cuts is inflationary for hard assets, however Copper is not buying this premise at least for now.

Currently the price action for Copper is sitting between 26,680 resistance & 25,940 support. In addition the price is respecting its downtrend line as well. So moving forward we would need to see a clear breakout above both 26,680 & 27,135 resistance, before we see Copper following the bullishness of US stocks. Given the weakness its more likely we see the price move towards 25,940 soon.

Platinum's price action is showing a close resemblance to Copper's price action, as it also has not seen any recent bounce in the last two weeks of trading, while also hovering near its lows reached In Dec 18 & Feb 19.
 
Why this is relevant is because Platinum is utilized in multiple industrial applications in multiple industries within the manufacturing process. So just like Copper, the price action of Platinum at the beginning of the year saw a decent rally and new uptrend formed as the markets were pricing optimism on the global economy based on a trade deal being struck between the US & China.
 
Now the deal has collapsed, the price action has collapsed along with the deal. Platinum is also in a consolidation pattern as it currently is respecting $800 support after hitting $820 resistance last week. Given that global economic macro data remains weak as global trade slows, it likely like copper we see lower prices in the short term.

So if we see a break of $800 support, look for a move towards $780. If we see a move above $820 in the coming weeks, followed by a close above the 52 day moving average price of $845 - $850, then this would indicate a shift in optimism for the global economy.

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Last week price action for US stocks was remarkable from the start to the end of the week. On Monday we saw US stocks gapped lower on the threat of tariffs on Mexico by Trump. With each trading day we saw weak or negative economic news being released in the US. Yet what we saw was stocks were no longer moving lower. By the end of the week on Friday we had US Non-farm payrolls released and it was a massive miss, coming in at 75k new jobs instead of 177k estimates, but it didn’t matter. By the end of the day stocks continued to move higher, as it followed the momentum of buying that started from Tuesday. So why successive pieces of negative news & economic data being released did the S&P 500 index form a bullish engulfing pattern on increasing volume? The answer in one word is: FED.
 
Last week Mr Powell held its monthly press conference and the general point of the commentary by Powell was that the FED would do what is required to keep growth going in the US. Which the market interpreted as the FED is about to start cutting rates, with the likely hood of several cuts to come by the end of 2019. The reaction by the market was swift, as we saw the US dollar index roll over and break its uptrend, while Gold shot up this week over $100 an ounce as the market digested another pivot by the FED moving forward. Which is why I realized this week that this lows reached at the beginning of the week was likely to be the lowest prices we will see moving forward for the rest of the year.

Looking at the price action of the weekly chart for the SPX index, you can see that we have confirmed another higher low was formed, as the most recent low close was still above the lows reached back in the first week of March this year. This confirms on a weekly chart that the buyers are still in control of US stocks. The other interesting thing is that volume on the previous two weeks of falling prices was below the average volume for the index. With this week bullish engulfing candle stick pattern was formed on slightly above average volume, which also confirms the bullishness of the move.

This week I would be looking to see if there is follow through for the week in higher prices to close the week, to support the bullish pattern. If there is follow though its possible, we could see a move towards 2,930 resistance level either this week. If we see follow through buying then the likely support on a retracement is 2,873-75 level to look for in coming weeks. If we on the other hand see this move as a failed move, then prices would need to move back towards 2,785 support. However this is unlikely now the FED has given the green light for stocks to move higher regardless of how back the economy is. Well at least for now that is.
 
Lastly on a more of longer term look ahead, given the outlook of the FED and the interesting price action for US stocks, it would not surprise me at all if we see new all-time highs reached in the coming weeks or at the least next few months.

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Crude Oil last week experienced the worse selloff for 2019 as it fell around -7% for the week. The price action has now confirmed the end of its uptrend, as well as confirming that the bears are back in total control of Crude. The reasoning for this is that the closing price on Friday is now comfortably sitting below its most recent low and support level of $60.40, which it smashed late in the week. In addition, the price action is also now firmly below the long term 52 day moving average (MA).
 
If you take a look at the chart back in late October 2018, which I have circled, you will notice a similar pattern shown. You an also see what followed next for Crude Oil, after the pattern was shown, closing below support and trading under the 52 day MA. Its not clear whether the same crash in prices is evident from the price action so far, but what is clear based on the weight of evidence from the chart, that at least over the next few weeks we are likely to see lower prices ahead, after we see some consolidation from the big moves seen last week.

Looking ahead for this week, I’m expecting to see some much needed consolidation with a potential move this week back to its old support now resistance, around $$60.40. This is because the price action at the end of the week respected support of $57.40 twice, with a double tweezer. The consolidation will allow the oversold price action to regroup as well as the 10 MA catch up to the current price action.
 
Provided Crude Oil holds and doesn’t firmly close above the $60.40 either this week or next, I’m looking for Crude Oil to rollover again soon and move back to $57.40 support, with an eventual target of $55 a barrel once we break the $57.40 support level.
 
If this scenario does eventuate it will likely also bring down the major stock indices of the Nasdaq, Dow & S&P 500. Of course in the era we now live in with the markets, we must also be aware of the possibility of the shock interventions of global Central Banks, when the markets are tanking, to reverse downside moves.

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The FANG index consisting of Facebook (FB), Amazon (AMZN) Netflix (NFLX) & Google (GOOGL), concluded the week on a very bearish tone, reversing all the gains made earlier in the week. With the market finishing at the lows of the week and back below support of 2,575 level. Based on how the index finished on Friday I’m expecting a move towards its 2,500 support in the week ahead.
 
The FANG index which in 2018 outperformed all of the US stock indices, is actually now under performing in 2019. The FANG’s has failed to reach or make a new all time high level from the Jan - April 2019 rally, unlike the S&P 500, Nasdaq index.

More importantly based on the price action that occurred over the last few weeks, saw the FANG index make a new lower low and lower high pattern on the failed rally attempt this week. This indicates that the FANG index is now firmly in a bearish position, with the sellers in control of the index and sitting below the 52 day moving average. This contrasts strongly with the DOW, Nasdaq & S&P 500 which have all failed to confirm a lower high as of yet.

Moving forward, depending on whether the index is able to hold the 2,500 level in the short term, will decide on whether the index moves straight pass 2,500 support level and make its way towards the 2,360 level over the next few weeks. Given where the current price action is relative to the distance from the 52 day moving average line, suggests the FANG index can easily reach the 2,360 on the next down leg move.

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This week saw a sell off in US stocks, as Trump once again via his tweets decided to rattle the markets, telling the world that China has breached the trade negotiations. With higher tariffs coming for China on Friday. This caused havoc in the markets as they immediately gaped lower
 
Fast forward to Friday where Trump confirms that tariff increases for China and we experience another weak trading day. Only to see something different from the previous 4 trading days. On Friday the markets were down over 1.5% and suddenly the markets stopped falling and began to climb for the remainder of the day, closing in the green and more importantly above the highs of the previous trading day. This was significant as it signaled at least in the short term for US stocks that we have likely reached a bottom.
 
Friday's trading session also showed us that since the S&P 500 made a new all time intraday record high two weeks ago, to the lows reached on Friday trading session the market has only fallen -4.3% peak to trough.
 
The price falls on Friday also happened to fill the gap that was recorded back on the 1st April went it gaped higher (see chart). The price action for Thursday & Friday also touched the 52 day moving average and then proceeded to close higher, indicating the overall market still remains in a bullish trend despite the pullback.
 
Based on Friday’s intraday reversal move higher, if the lows recorded hold in the short term and we move higher this week, the market will also have confirmed a higher low, indicating the market despite the mild sell off has experienced a pullback within a bullish trend move. This also means at least for now its not time to be bearish of the markets. But rather take this selloff as a much needed pullback in a bull trend.

So What Happens Next?

If the lows from Friday hold this week and the market continues to move higher, the potential next target for the S&P 500 is the prior support now resistance level at 2,930. However what we see unfold over this week and the next few weeks are key in determining if US stocks remain in a bullish trend, or whether we need to move towards a bearish stance going forward, especially as I expect volatility to remain for the next few weeks as the markets digests the new tariff increases.
 
If the S&P 500 fails over the coming weeks or months to make a new higher high, but instead begins to reverse and move lower towards the most recent lows creating a lower high, this would be the start to preparing to become bearish.  If a lower high was to occur and we followed this with a clear close below the most recent lows experienced on Friday, then the bullish trend would be over and we would need to look at bearish positions for the S&P 500. This would be because the index would have reversed trend with lower prices likely to occur now that the bears would be back in control. So we have to be open to staying flexible and fluid to what the price action tells us the next few weeks.

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Crude Oil suffered its second weekly fall last week following Trump’s tweets on OPEC & Gas prices. So far the market appears to be paying attention to Trump’s attempt to lower Oil.

Looking closely at the weekly Crude Oil chart, we can see that prior to breaking its uptrend line this week, the price on the weekly chart moved all the way back to a previous support (now resistance) level of $64.30. Once it reached this level, it made a few failed attempts to close above resistance.

This week's follow through selling, saw the price action breach the uptrend line that began in late December ‘18 similar to when the S&P 500 market rally started. The last time Crude Oil breached its uptrend line back in Oct 18 (see circled area), we saw the price of Oil fall further. Potentially -33% lower.

However, this time the breaching of its uptrend line has so far had different movements relative to the breach last October ‘18. For one, the price action of Oil is still trading above its 10 week moving average. Back in Oct 18 when it closed below the uptrend line it also closed below its 10 week moving average.

Another interesting point is back in October ‘18, the S&P 500 weekly price action was following in very similar lock step to Oil prices, with the S&P 500 also breaching its uptrend line & closing below its 10 week moving average. However, this week the S&P 500 has made a new all time high price.

So going forward we have to be open minded that we could see further pull backs ahead for Oil, while at the same time also looking out for the possibility that this could be a pullback / consolidation, within a long term rally even though its broken its uptrend level.

To become more bearish with Oil, we have to see a breach of its current support that it has so far been respected at $61.45, as well as a close below the 10 week moving average this week. If that happens, our next level of support to look for is around $59.

Conversely, to become bullish on Oil, we need to see support of $61.45 held this week, with a clear break above its $64.30 resistance level. If we see this occur, this would be a very bullish signal & a likely move to $67.70 would occur shortly after.

So for now we have to wait and watch to see what unfolds to gain a better understanding on where we head next.

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The barrage of negative news flow, week after week has finally taken its toll on the stock price. With just a few trading days left until the end of the month it looks like TSLA has broken a key support level of $266 on above average volume. The price action this month with a breakout lower than support is a rather big warning to Tesla bulls that the party is over and it’s time to look at their options going forward.

Based on the monthly price action this month, together with the price relatively close to the long term moving average (green line), the next two levels of support are within reach over the second half of 2019. The next initial support level which was also a major level previously is around $188 - $189 or a $45 drop from current levels. This could easily be achieved in the next month or two. Beyond the first level of support, the next area to watch is between $126 - $128.

The daily chart for Tesla is looking just as bearish as the monthly chart price action. With the last two trading days breaching its $250 support level of extremely high volume and negative news flow including a large miss on already revised lower earnings this week.

Going forward this week, we are likely to see soon a short-term reversal / consolidation phase take place, with a possible target of its old $250 support level, which is now its resistance area. Given the daily chart has been experiencing a series of lower highs and lower lows, leading up to this week we could see a breakout for Tesla. I'm expecting any rally in share price when it does occur to be short lived.

Once we have seen a consolidation take place, I'm expecting a move to the next level of support on the daily chart of $205 over the coming weeks and months. Especially given the company itself requires a capital raising soon, has high debt levels and has negative cash flow within its current business plan.

For Tesla bulls this month price action on both the daily and monthly chart is an early warning on further weakness ahead for this “Auto Tech” stock for the remainder of 2019.

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This week was a monumental moment for U.S tech stocks, as they reached their previous all time high resistance / mountain peak around 7700, and for a brief moment surpassed this level making a new all-time intraday high around 7715. The week finished off with the highs at around $7690.

This week was also interesting as the index reached prior resistance area, while also hitting the bottom of the long term uptrend line that had been established in early 2016 on the weekly chart, signaling it hit two different resistance areas that have come together. This is significant as I'm expecting some volatility ahead with a pullback coming soon as a consequence of reaching these levels.

The other reason why I believe this, is that the weekly moving averages are quite stretched from the current price action. The current distance shown by the arrows is roughly the same distance as the previous separation before we saw the index pull lower.

Unlike the previous time this occurred, we saw a significant drop of close to 20% off the peak. I'm not expecting as big a fall to occur with the upcoming consolidation period ahead. One of the main reasons for the difference is that the FED has now completely performed a 180 turn on its monetary policy to appease the markets.

Based on the assumption of the continuation of global central banks to pump liquidity in the global markets, I'm looking for a more mild pullback and an eventual move soon to either the first support level area of 7375, or potentially a bigger move towards 7100 support area.

After we have seen several weeks of consolidation and the moving averages have had a chance to catch up to the price action, I would be looking to see the markets begin to attempt to move back to the prior resistance area of 7700, before it then makes another attempt to march towards a new all time high, with an eventual higher highs created.

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The S&P 500 index ( SPX ) gaped on the open with a positive lead from China on a bigger than expected trade surplus earlier in the day. Along with bullish tone set by JP Morgan( JPM ) with a beat on earnings on the pre-open.

The last week or two had shown low volumes as the blackout period grew for buybacks shutting out most companies from engaging in pushing their stock higher.

Despite this, the market moved higher albeit at lower volumes. However, the bright spot on Friday was a gap open with follow through buying on an above average volume day. Given that the buybacks black out is right at or close to the peak, this is a bullish sign that up until recently had been lacking in the current rally on the S&P 500.

Time For Caution Ahead

Although Friday’s move was welcomed by the bulls, caution is required this week as we move closer to the previous resistance level of 2,930 and prior all time high area. I'm expecting that this area will be challenging for the market to break clear of with conviction, given the strong rally leading up to this area. Given the bullish momentum from Friday we may even see the market move above the resistance level temporarily, (one or two trading days) before pulling back to this level or back below it for some much needed consolidation.

Since the U.S. is at the start of the earnings season and the bar is set low for EPS expectations, we could see significant volatility over the next 2 weeks including a surprise pullback in the market.

However, as previously stated, I'm not suggesting we are close to seeing a crash in the market. The main reason for this is the series of higher lows within the uptrend, along with the price action clearly above the 52 day moving average. Until this trend reverses with a fresh lower low, followed by a lower high on the daily chart, the bulls will continue to lead the market higher over time.

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