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A Big Change Is About To Come The Stock Markets' Way

By Michael KramerStock MarketsMar 31, 2021 12:34AM ET
www.investing.com/analysis/a-big-change-is-about-to-come-the-stock-markets-way-200570460
A Big Change Is About To Come The Stock Markets' Way
By Michael Kramer   |  Mar 31, 2021 12:34AM ET
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Stocks finished mostly lower yesterday, with the S&P 500 down about 30 bps and the NASDAQ QQQ ETF down 50 bps. The charts all appear to be saying one thing at this point, and it’s that something is about to dramatically change. Whether it is good or bad is hard to discern because the patterns point to lower prices, while the market momentum seems hard to go against.

The March 2020 uptrend is being re-challenged, and unless the index breaks higher, it is at risk of moving through that trend line. This time the risk is that the S&P 500 will fall below it permanently, signaling a change in trend, and potential direction.

This means, I think, the sideways range of 3960 on the futures is over.

S&P 500 Emini Futures Daily Chart
S&P 500 Emini Futures Daily Chart

There are not many clues out there to help, but the pattern is a rising wedge and that is normally bearish. Meanwhile, the RSI is trending lower and that too is bearish. So a change in direction from higher to lower would not be surprising.

Dow Jones Transports

Meanwhile, the Dow Jones Transportation average is bumping up against resistance that dates back to June. The volume levels have been really bad, and the RSI has been going sideways. It would suggest that a pullback starts at this point.

Dow Jones Transportation Average Index Daily Chart
Dow Jones Transportation Average Index Daily Chart

DocuSign

We have been waiting a really long time for DocuSign (NASDAQ:DOCU) to break, and that time may be now. There was a bearish descending triangle in the pattern, and a drop below $196, signals a further drop to $160.

DocuSign Inc Daily Chart
DocuSign Inc Daily Chart

Micron

The bearish bets keep piling on for Micron Technology Inc (NASDAQ:MU), with another one registering yesterday. The stock will report today, and it is likely to come down to gross margins as it always does. The bearish options bets, coupled with the weak price action suggest, disappointing gross margins. We will see, but a drop to $74.20 does seem probable.

Micron Technology Inc Daily Chart
Micron Technology Inc Daily Chart

fuboTV

What’s happened to Fubotv (NYSE:FUBO)? I haven’t looked at this one for a while. Could it go even lower? The RSI says yes it can, that would take it all the way back to $15. (See: fuboTV’s Stock Is In The Middle Of A Giant Squeeze)

FuboTV Inc Daily Chart
FuboTV Inc Daily Chart

Lemonade

Lemonade Inc (NYSE:LMND) is in the same boat, and the stock's giant run-up, like fubo, was all options-induced gamma squeezing. That’s unfortunate/

I tried to warn many of what was happening, and that these stocks were rising not because of their fundamentals, but because of how the mechanics of the market works. The declines have been brutal to witness. (From January 11- The Lemonade Squeeze Grows More Insane)

Lemonade Inc Daily Chart
Lemonade Inc Daily Chart

Anyway, we will save some other ones for another day this week.

Original Post

A Big Change Is About To Come The Stock Markets' Way
 

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A Big Change Is About To Come The Stock Markets' Way

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Comments (8)
Bob Cauley
Bob Cauley Jul 05, 2021 4:18PM ET
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Going higher this week
Mark Manley
Mark Manley Apr 09, 2021 11:45AM ET
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nice roll-up, thanks
John Quinn
John Quinn Mar 31, 2021 5:06PM ET
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Good analysis.  Check your rising wedge theory on SPY/ES.  Historically that pattern is very unreliable for a breakout, breakdown or major change of trend.  Price will frequently and convincingly "break" the line for what turns out to be a good sized pull back because it'll work its way back, usually to the apex of the wedge.
francisco carvalho
francisco carvalho Mar 31, 2021 12:25PM ET
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since i read this article i knew the market is about to break up... cheers
soheb merchant
soheb merchant Mar 31, 2021 10:47AM ET
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thanks for sharing. v good analysis
apostolos sideris
apostolos sideris Mar 31, 2021 8:05AM ET
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thanks a lot michael.great article.
CHAD TENDIES
CHAD TENDIES Mar 31, 2021 7:38AM ET
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Free money printed to infinity stonks will go up while dollar will go down
Ethan Strong
Ethan Strong Mar 31, 2021 6:04AM ET
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Bearish indicators are really starting to show. VIX is at the lows again. SPY is really starting to show weakness with lower volume. 10 yr. is jumping around. Covid on the rise. Suez created a huge back log. One more catalyst will tip the scales.
 
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