Today’s overview is strictly for technical analysis grunts. The world is in a hot mess as NATO’s proxy war with Russia inside Ukraine will not end anytime soon, the ongoing supply chain crisis is set to deliver another fatal blow to the U.S. with China’s largest cities and shipping hubs in a perpetual pandemic lockdown, the Fed’s blowing monetary policy smoke for another TaperCaper that’s primed to implode the U.S. economy into recession sooner than later, and a nasty inflation bug is biting more deeply as each week passes. The following articles of interest are an appetizer before diving into the stock market charts.

• Bad Things Happen When The Fed Tightens – David Rosenberg, Mar. 15

• Goldman Sachs Says Market Too Sanguine on Ukraine Risk – Bloomberg, Mar. 18
• Fasten your Seat Belt – NAVA Capital, Mar. 25
• Capital Flows Confirm War is Coming – Armstrong Economics, Mar. 26
• This Rally Is Nothing But A Huge Bear Market Squeeze – RemarkBoard, Mar. 27
• Hoisington Investment Management 1Q22 Review and Outlook – Lacy Hunt, Mar. 31
• Fed’s Dudley Says Fed Might Need to Force Stocks to Fall – Bloomberg, Apr. 6
• How to Survive the Coming Economic Disaster – Jim Rickards, Apr. 17
• Fed’s Soft Landing Doesn’t Rule Out Hard Landing for Equities – Joe Carson, Apr. 19
• Putin Knows Monetary System Is A Ponzi: Lawrence Lepard – QTR, Apr. 20
• El-Erian Warns ‘Global Growth Engines Are Sputtering’ – Project Syndicate, Apr. 22
• Expect More Stock Market Pain Because It’s Coming – Mish Shedlock, Apr. 22
• One by one, the Giant Stocks that Held Up the Market Let Go – Wolf Street, Apr. 22
• China Covid death toll rises as Beijing warns of ‘grim’ situation – AFP, Apr. 23
• Why Albert Edwards Expects “Something In The Market Is About To Snap” – ZH, Apr. 24

Let’s go to the Dow, S&P 500, NASDAQ 100, and Russell 2000 charts and see what happened since the Jan. 21 analyses. The stock market indices are being slowly squeezed to the downside by automated trading platforms and negative data points that Wall Street and Capitol Hill appear to be rooting for. Don’t be a hero and impale yourself with falling knives. The takeaway from Jan. 21 is more relevant today than it was three months ago:

“Caution is warranted in this long and short scalping environment and layering capital into long-term positions is not recommended at this time.”

To view a larger version of any chart below, right-click on it and choose the “view image” option.

$DJI Dow Jones Industrial Index weekly chart as of Apr. 22, 2022 close…

Excerpt from the Dec. 31, 2021 weekly chart analysis:

“The third tap on Ascending Broadening Wedge‘s lower trendline was nearing the elusive 50 Exponential Average (EMA). The subsequent pivot reached an all-time high this week, but ended with a bearish Plunger Candle (aka Shooting Star).”

Excerpt from the Jan. 21, 2022 weekly chart analysis:

“Price action on the Dow made a slightly higher all-time high in early January, then proceeded to rollover on negative economic news and data as headlines about Russia and the U.S. butting heads over Ukraine came to the forefront. The first weekly candle following Dec. 31, printed a clean and bearish Shooting Star with a substantial increase in sell Volume which reinforced the previous week’s bearish Plunger candle… The DMI-ADX setup could morph into a negative power trend if an Alligator Tongue takes hold, the StochRSI is trending negative, and sell Volume increased substantially over the last three weeks. The chart is bearish, and will become more bearish if the 50 EMA is breached on heavy sell Volume.”

At first glance, the charts are definitely having a bearish Plunger Candle party. During the week of Jan. 24, the Dow fell below the 50 EMA and lower trendline of the Ascending Broadening Wedge. That event printed the first downside stairstep. The price pivoted to the upside in a classic Throwback pattern, and was followed by two Plungers that launched a waterfall and tapped the 23.6% Fibonacci (confluence with a Fibonacci Extension). That marked the second downside stairstep with a long-tail Dragonfly Doji. The Dragonfly did not close above the 50 EMA and resulted in two weeks of downside price action. The subsequent rally printed a Marubozu candle and solidified a lower trendline that’s drawn up from the Nov. 2020 election low. That rally did not last long, as the next three candlesticks were Dojis and included an Evening Doji Star at the high. That’s indicative of major indecision and led to another Plunger candle close with the Dow plummeting 916 points on Friday.

Any lateral support that remained at the Tweezer Bottom from Jun. 2021, was wiped out with the sell-off to the second downside stairstep. The DMI-ADX is slowly losing negative momentum, the StochRSI is not a happy camper, and sell Volume during the last three months has been substantial. The situation is precarious. One negative headline could quickly drive the price down to a third stairstep where large buy Volumes will provide some support from Mar. 2021 at the 23.6% Fibonacci Extension level around 31,422. The number three is very common in technical analysis and I must assume the chart is on its way to a third wave down. The chart is bearish and a scalping environment for professional traders.

$SPX S&P 500 Index weekly chart as of Apr. 22, 2022 close…

 

Excerpt from the Dec. 31, 2021 weekly chart analysis:

“This week saw a new all-time high of 4,808.94 and ended with a bearish Plunger Candle close at 4,766.19… The 50 EMA is trailing far below the price action since the 2020 election and is overdue for a visit.”

Excerpt from the Jan. 21, 2022 weekly chart analysis:

“In similar fashion as the Dow, the S&P 500 printed a slightly higher high immediately after 2022 chimed in and began rolling over… A Plunger candle was followed by a Bearish Engulfing candlestick, then a Long Legged Doji that’s indicative of indecisiveness, and finally this week’s bearish Marubozu candle cut through the 4,530 lateral support like butter and breached the Ascending Broadening Wedge’s lower trendline… The chart is bearish and will become more bearish if 4,279 is breached with conviction. If things really get ugly, 4,060 is the next bus stop.”

The SPX came close to printing 4,060 on its second stairstep to the downside during the week of Feb. 22. The candlestick story is nearly identical to the Dow and not worth repeating. The DMI-ADX and StochRSi are more bearish than the Dow, the sell Volume characteristics are similar, and the 50 EMA was cleanly breached to the downside. Support levels below 4,060 are all nicely situated around the Fibonacci levels. I must assume the chart is on its way to a third wave down. The chart is bearish and a scalping environment for professional traders.

$NDX Nasdaq 100 Index E-Mini Futures weekly chart as of Apr. 22, 2022 close…

 

Excerpt from the Dec. 31, 2021 weekly chart analysis:

“After printing an all-time high of 16,767.50 in the fourth week of November, the price action has been volatile with large sell Volume spikes and falling buy Volume into the holiday season. This week closed with a bearish Gravestone Doji.”

Excerpt from the Jan. 21, 2022 weekly chart analysis:

“The Up Channel’s lower trendline was decisively breached this week with a bearish Marubozu candle. The downside price action was halted in its tracks slightly above the 23.6% Fibonacci level, and just below the 50 EMA. The DMI-ADX is not set up with the perfect Alligator Tongue for a negative power trend with the black ADX line piercing the green DMI from below, but it must still be respected. The StochRSI has broken down and is skimming along oversold territory… The chart is bearish and will become more bearish if 14,030 is breached on decisive sell Volume. The 38.2% Fibonacci at 12,894 would be the next target.”

Always trust your indicators and studies. Respecting them is better than getting whacked or playing with knives. 14,030 has been violated twice along with the 50 EMA. A third wave down is very likely. Support levels below the 38.2% Fibonacci are clearly marked on the chart. The chart is bearish and a scalping environment for professional traders.

$RUT Russell 2000 Index E-Mini Futures weekly chart as of Apr. 22, 2022 close…

 

Excerpt from the Dec. 31, 2021 weekly chart analysis:

“Last week’s rally provided the momentum that pushed the price above the red trendline this week. The price action closed at 2,242.80 and printed an indecisive Spinning Top candlestick… If the (50 EMA) and 23.6% Fibonacci is breached to the downside on large sell Volume, watch out below.”

Excerpt from the Jan. 21, 2022 weekly chart analysis:

“Spinning Tops must be closely watched and it was the peak of a Dead Cat Bounce to end 2021. The following week printed a Plunger on top of the 50 EMA and last week another Spinning Top. This week’s Marubozu candle put a fork in the pig and decisively breached the Right-angled Ascending Broadening Formation’s lower trendline… There is a chunk of buy Volume in 4Q20 that will provide support as the price action chops downward to the 38.2% Fibonacci level, and potentially the 50% Fibonacci where support exists. The DMI-ADX is in a negative power trend with an Alligator Tongue on the rise, the StochRSI is skimming along oversold territory and could remain there for an extended period of time, and the sell Volume is huge and trending upwards. The Russell is the most bearish among the indices. Hang on tight and wait for a bottoming pattern to emerge before committing any long positions.

There is nothing significant that can be added to the Jan. 21 commentary. If the 38.2% Fibonacci is breached to the downside with conviction, the price action could easily transition into a third wave down and tap the 50% Fibonacci level around 1,700 or so. The chart is bearish and a scalping environment for professional traders.

How to Survive the Coming Economic Disaster – Jim Rickards, Interview With Triggernometry, Apr. 17

 

Plan Your Trade, Trade Your Plan

TraderStef on Twitter , Gettr / Website: TraderStef.com

Headline Collage Art by TraderStef