Over the past couple of months, the financial markets have exhibited a notable resilience. Despite each downward fluctuation, investors have consistently stepped in, preventing any significant correction from developing. This has left many market participants on the sidelines, eagerly anticipating a more substantial dip that has, thus far, failed to emerge. Instead, the trend has been a succession of increasing peaks and troughs, exemplified by key players such as Microsoft, notwithstanding several unaddressed drops beneath their current valuation.
Back in April, amidst a turbulent phase marked by a general sense of panic and disinterest in the burgeoning bull market, I foresaw this market dynamic. On April 26th, amidst this environment, I documented an occurrence of the Zweig Breadth Thrust, which is a seldom-seen bullish signal. This indicator, along with historical charts, suggested a potential turning point.
For those who are possibly hearing about the Zweig Breadth Thrust for the first time, it’s crucial to recalibrate your market outlook. This is particularly relevant after witnessing days of profound bearishness, where market movements hint at a drastic change in direction, potentially invalidating pessimistic market setups.
Many traders experience frustration upon missing the absolute market bottom, allowing doubt to inhibit their willingness to take long positions. The charts in April provided examples of how such market reversals frequently unfold amidst erratic price movements, often causing hesitation. If this scenario speaks to your current sentiment, it may be time to shift perspective and adapt to the market’s present state rather than clinging to an idealized version.
A subsequent rare bullish signal emerged two months later, following a significant downturn, indicating a potential 20% upward movement in the next 8 weeks. This further supported my analysis.
### Three Bullish Signals – The Road Ahead
Historical data surrounding these bullish signals demonstrate that rapid price rallies often propel the market into overbought territory. In today’s context, a minor retreat from these levels would be a normal market behaviour.
An element of analysis worth discussing is the shooting star formation, an indicator of bearish reversal. This pattern, characterized by a long upper shadow that is at least double the length of the real body, suggests that despite an initial upward movement during the session, selling pressure eventually prevailed, pushing the price down. An examination of recent market activity provides a clear illustration of this phenomenon.
Looking at the volume shelf starting at $231, it’s anticipated to serve as a significant support zone if a pullback occurs, highlighting the importance of watching support and resistance levels for potential market direction.
Considering the overall sentiment, as long as the price remains below a certain threshold, a continuation of bearish momentum is expected, with specific targets within striking distance. Conversely, breaking above this line could indicate a bullish reversal.
### Anticipated Catalysts
On the geopolitical front, developments in the Middle East and the potential implications of United States involvement are closely monitored. Market reactions to these events could align with the current bearish setup.
Economically, a busy week looms, marked by significant geopolitical and geographical events. Attention will turn to the Federal Reserve Chair’s speech, along with a series of important economic indicators due for release, all of which could influence market direction.
### Focal Stocks
Palantir Technologies has led the charge in the recent rally, drawing comparisons to NVIDIA’s trajectory towards 2025, as discussed in my earlier publications. Following a precise forecast, the stock reached a predicted milestone before stabilizing. The upcoming week appears pivotal for Palantir, with several indicators suggesting potential market movements.
Netflix, similarly, has reached its projected bullish target, with the last few weeks characterised by consolidation. The coming days appear critical for determining its immediate direction, influenced by various support and resistance levels.
It’s imperative for traders to consider these insights within the broader context of the current market landscape. For those actively trading or interested in the stocks mentioned, more detailed analysis is available, designed to guide investment decisions effectively.
Please note, this analysis aims to provide educational insights and should not be construed as investment advice. For more detailed analysis and updates, further resources are available.
Thank you for your attention to this detailed market overview.
