Chart Advisor: Bears Be Warned

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

Thursday, 20th July, 2023

1/ Bears Be Warned

2/ HERO Answers the Call

3/ PIGS Run to Higher Ground

4/ Soybeans Halt Beneath Overwhelming Supply

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ Bears Be Warned

The Dow Jones Industrial Average (DJIA) has joined the new 52-week high list. It was only a matter of time as the stock market enjoys a solid bull market off last year’s lows. 
 
Check out the world’s most important stock index finally breaking out of a massive rounding bottom formation with authority:

We continue to witness upside follow-through after last week’s breakout.

The path of least resistance points higher for the Dow as long as it holds above the shelf of former highs from 2022 and earlier this year.

A breakout for Papa Dow has big implications. Mainly, it confirms the primary uptrend in U.S. equities, reaffirming the bull market that’s been in place for over a year.

Bears be warned: Don’t fight Papa Dow!

2/ HERO Answers the Call

Video game stocks are breaking to fresh 52-week highs.

Everything seems to be working, from big tech to small banks and, of course, the Dow Jones Industrial Average.

Here’s a look at the Video Game & Esports ETF (HERO) completing a bullish reversal pattern:

Charts like these make it difficult to imagine that the consumer is dead. It’s quite the opposite, as video game makers such as Activision (ATVI), Nintendo (NTDOF), and Electronic Arts (EA) post new year-to-date highs.

As the major indexes march higher, HERO calls our attention to participation broadening out to the stock market’s more speculative or adventurous areas.

3/ PIGS Run to Higher Ground

Looking overseas, even stocks in some of the weakest economies are catching a strong bid.

Check out our custom equal-weight index of Europe’s secular laggards, the “PIGS” (Portugal, Italy, Greece, and Spain), as it makes new five-year highs:

The fact that the weakest countries during the last global financial crisis are reaching new highs speaks to an increasing risk appetite among investors—not just in the U.S. but globally.

With participation expanding across the U.S. and global equities, it’s becoming increasingly difficult for investors to hold a bearish thesis.

Just look at the PIGS. They’re leaving the bears behind in haste as shorting global equities has become hazardous.

4/ Soybeans Halt Beneath Overwhelming Supply

Grain markets are ripping!

Wheat, corn, soybeans … You name it. All have swung higher this week on the news of Russia’s withdrawal from the Black Sea grain deal.

We’re not as concerned with the headlines as we are with price. And based on the charts, many of these contracts are running into logical resistance levels.

Soybeans present an excellent example:

After pulling back to find support at a key retracement level, November soybeans are challenging a shelf of former highs. The tactical trend remains higher, and the bulls are in control, evidenced by the bullish momentum regime on the 14-day relative strength index (RSI).

Nevertheless, supply looms large at approximately $1,400. Perhaps it’s time for soybeans to slow their roll and digest recent gains.

On the other hand, we could witness a $1,500 handle in soybeans in a heartbeat if and when demand absorbs overhead supply.

Originally posted 20th July 2023

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