The weekly market review discusses the movements of the S&P 500, DJIA, Nasdaq, and oil indexes as well as Facebook, Amazon, Netflix, and Alphabet stock. It notes that the S&P 500 broke support but rallied back hard, the DJIA held support despite large swings, and the Nasdaq had a near miss at weekly support. For stocks, Facebook, Amazon, and Alphabet bounced off support levels while Netflix is less strong. The review concludes that last week's rally may have been a relief rally but most stocks still have a way to go to turn positive again.

1. Week In Review
Week Ended 22 January 2016

2. S & P 500 Index
We broke support, made a new low and rallied back hard this week. You will hear
lots of discussion about capitulation and such. Unless price breaks through this
week’s high (middle horizontal line) next week, I wouldn’t count on it. If it does
manage to break through, the next level of resistance is last week’s high (the top
horizontal line). Finally, watch the bottom line (the new swing low put in this week).
If we break down through that we’re likely in for a ride much further down… in short
order.
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3. DJIA Index
The Dow held support for the week even with the enormous price swings
(1,000 points on Wednesday). It looks like a nice bounce off a strong
support level, but I’m not a believer. I think we’re likely to see lower
prices before we see a new high. That said I would have to consider a
long if price can get back up through TVZ on a closing basis.
Copyright 2016 The Art of Simple Trading;
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4. Nasdaq Composite Index
The Nasdaq Composite also had a near miss at weekly support. Is the
selling over and price ready to resume the upward trek? Genuinely not
even worth considering a long unless price can make it back above TVZ
(around 4950).
Copyright 2016 The Art of Simple Trading;
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5. OIL iPath S&P GS Crude Oil Tracker Index ETN
Switching to OIL from USO to monitor crude’s movement. Lots of
excitement about oil’s big move today up almost 10%. The question is
whether this is a relief rally or is it to be sold? Probably the latter, but a
weekly buy signal off the top of last week’s candle with a stop below the
week’s low looks good if you’re looking to play the inevitable bounce.
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6. Facebook, Amazon, Netflix, Alphabet

7. Facebook
Facebook performed a textbook test of TAOST Value Zone. If the stock is
able to eclipse last week’s high, that could mean higher prices for it and
the overall market.
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8. Amazon
AMZN closed right on the support/resistance line leaving the question
wide open as to whether price will resume its strong trend to the upside.
Given the way it and its F.A.N.G. brethren are structured, it’s entirely
possible that price could hold and push higher.
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9. Netflix
Netflix held serve above TAOST Value Zone as well, but it doesn’t “look”
nearly as good as the other 3 stocks in the F.A.N.G. family. Watch the
area in the circle closely in the coming days… It will tell you a lot about
the price prospects of Netflix.
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10. Alphabet
It still feels weird to write (much less say) Alphabet instead of Google… And
still… The stock had a nice bounce off support and helped spur the market
higher in the back end of the week. Like the other charts, price needs to trade
above the high of last week to confirm the reversal, so watch the high of last
week and the low for guidance on near term market direction.
Copyright 2016 The Art of Simple Trading;
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11. TAOST Bottom Line
What we saw last week appears to have been
a powerful relief rally. Was it true
capitulation? The volume and strength of the
moves suggest it could be… however, most
stocks have a long climb back to a positive
structure. The F.A.N.G. stocks will likely
continue to lead and may even pull the
markets back toward highs… But they have a
lot of work to do.
Copyright 2016 The Art of Simple Trading;
All Rights Reserved