DAY TRADE - Technology Sector

7 Eki 2020

After an intense drop yesterday determining today's sentiment will be difficult, however there are several signals that will allow traders to make some intraday moves.

There are 3 scenarios that can occur today:

Tightening of the range:
High and lows squeezing together to form a slightly upward biased symmetrical triangle
A battle of defensive tech against economic fear causes indecision and tightening
RSI hovering around 50 for 4hour and Day chart

The collapse of the rally:
Constituent stocks such as AAPL and MSFT have failed to rally close to their pre tech correction highs causing swing traders to pull out
Resistance at 2080( S5INFT ) and 3400( SP500 ) has been double topped and thus further price movement looks unlikely
Head and shoulders pattern emerging in MSFT
Momentum indicator shows reduction in momentum
High percentage of short interest in major tech giants (fintel.io/ss/us/msft, fintel.io/ss/us/aapl)
Classic Value sectors(S5REAS, UTIL and CONS) not hit as badly by yesterdays crash suggesting potentially value strength
Failed to move over Fibonacci R1


Move to Upside:
New lows not achieved in overall bullish rally
Momentum indicator for day chart showing reversal to upside after tech correction
Remains in upper band of parallel channel
Remains above 50d MA
Remains in upper band of long term Bollinger Band
Most constituent stocks below price target

Verdict:

I believe significant tightening is in order today due to the battle between those who fail to believe tech can go
any higher and those who see it as a great defensive play with both stimulus package and election uncertainty.

With morning strength and movement above $115.1( AAPL ) and $208.30 ( MSFT ) a move towards 2067 is likely to occur. If significant momentum is behind this move and RSIs are not too overextended
a move towards 2080 may happen however, further movement over this resistance ($210 MSFT , $116 AAPL ) will be difficult and failure will cause major selling. If selling causes the price to drop below 2067 it is
unlikely a break above 2080 will occur, but with strong support, a major break with significant upside could be on the cards

With morning downside watch for a drop below 2044, this will alert sellers that moves lower are possible and selling will occur to bring the price further down than yesterday.

If the value falls back within the triangle it will likely move back towards yesterday's lows and settle somewhere around 2050.