Focus Setups: 23 Apr
Hello everyone,
Couple of charts have caught my eye:
The first is China, where despite the ongoing broad weakness in US equities, China stocks have been rangebound since March for a good 7 weeks.
This rangebound price action is taking place right at the business end of downtrend resistance that has been in play since January 2023. Now, while US equities are under pressure, this market looks primed for a breakout.
Daily Chart: China H Shares
Of course, I am also on guard for any sharp selloff at this key area. My bias is for the market to breakout higher, however.
Another market that caught my attention is precious metals, which is flashing danger signs of fragility.
Notice that gold and silver were on strong uptrends prior to Israel-Iran war news, and once the news was released, the sector topped out?
Market is a discounting mechanism, where price action tends to predict the news.
Silver’s double rejection candles on 12 and 22 April is signaling to me that this could be a double top for silver at this area. We might see silver pull back to sub-25 levels.
Daily Chart: Silver
Same situation for gold, which also saw two fierce sell-down candles on the same days. Now, it is testing uptrend support, but I do not expect this to reliably hold.
Daily Chart: Gold
At the same time, I think equities are setting up for a near-term rebound. Some key stocks are emerging in the sense that they are ahead of the indices in the way they are consolidating and soaking up the selling pressure.
Focus Setups: 23 Apr
CAVA - restaurant stock, out from big IPO base and now retesting breakout level. Starting to see some buying demand at 50 day MA. Beat earnings expectations last few releases.
Daily Chart: CAVA
LPG - shipping stocks are shaping up well (see BOAT ETF). LPG is one o f the leading lights in the sector. Starting to breakout from 2 week mini consolidative range.
Daily Chart: LPG
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