Stock Market & Crypto Analysis for Week Ending 7/31/26

[00:00:00] Speaker 1: Hey everybody, Brian Shannon here from Alphatrends.net. Today is Friday the 31st of July and our month is closed. For the month, semis lost 17%, the NASDAQ lost 7%, SPI eked out a small gain here and financials and energy were the big winners. So let's take a look at these charts and make some sense of it. It was really a fascinating week and there was a fascinating story about Leopold and his portfolio and what happened there. I would encourage you to take a look at some of the stories out there. Just fascinating supply and demand dynamics, risk management and making sure you don't go down in the death spiral, which he did a great job of it appears. So I will leave my opinions aside and let's stick to the facts and supply and demand for the market. The S&P 500, as noted, they lost, they gained, I'm sorry, a little bit of ground for the month, just barely. But for the week, it was a positive one. We had a lot of volatility. We came down to the anchor, which I don't know where it disappeared, but we came down to the anchor from the ceasefire. This is a level we've been watching for several months now. And once again, it became important. We closed below it. Now, that was through that fund liquidation. And as we were selling off Friday, Wednesday afternoon, rather, I had mentioned to subscribers, you know, this felt like there was a large liquidation going on. Of course, nobody knew what it was at the time, but that's exactly what had happened there. And that has so far marked what I'm calling the Leopold low. And that is where we saw today. So today we saw a perfect move, which was we gapped up. We saw a pullback right to where it was supposed to pull back to. This is what I had outlined pre-market for AlphaTrend subscribers, saying what we want to see is a pullback down towards the five-day moving average and the anchor from the Leo low. So that's exactly where the buyers stepped in and pushed this S&P 500 back up through the 20- and 50-day moving average. Now, they're still slightly going to be declining next week as, you know, the 50-day moving average, we average this data out next week. And the 20-day moving average averages this data out. So we're still realistically, I mean, you could draw a trend line off these peaks and say it's still bearish. Or you could draw a trend line off these lows and say we're in a triangle. The bottom line is I think you're probably just better off drawing a rectangle and saying we're in a range for the S&P 500. Now, that's not the same thing, of course, for the NASDAQ, which we still have a very clear pattern here of lower highs and lower lows. Those lower highs and lower lows are unfolding below a declining 20 and below a declining 50-day moving average. So, again, we want to look at the direction of the 50-day moving average and say, what would it take to change that direction? Well, we would, in order for it to turn higher, prices can either rapidly rise up. Is that reasonable to expect? Not so much. If we were, let's say, averaging this data out, which is lower than current prices, then the 50 would be flattening out. But next week, we average these five days out, meaning maybe the 50-day moving average turned sideways if we rally up, and the 20-day moving average could as well. But for now, you still have to look at the daily time frame here and look at it and say, we're in a downtrend. That has not changed. Just because we saw a couple days of strength does not mean that this pattern has changed. We do not have a pattern of higher highs and higher lows. We have a pattern of lower highs and lower lows. It doesn't mean it can't change. And this was certainly constructive action here today, getting back above the five-day moving average. My interest is pretty low right now because I will be out all next week. I will not be trading. So I would say, you know, next week, ideally, what would it do? Maybe rally up a little bit further and then pull back on the daily time frame, carve out a higher low here, then run up, challenge that 50-day moving average, and maybe turn sideways for a few days or a few weeks, and then be in a position to continue to move higher. If you're looking for earnings to provide guidance, of course, that we know that, you know, that's what kind of, you know, sunk the semiconductors and was the micron earnings. And we still have a very clear pattern here. I sketched this in previously. We came down close to the year-to-date anchored volume weighted average price. But what is important here is that we still have, you know, we've had several very strong bounces, and this being one of them. From the low of 500 to 550, that's 10% in just three days. Of course, those are enticing. Now, what I had drawn over here is this is a potential bearish scenario. It's not a call, but it's a potential bearish scenario. If what we see here, and let's put that Leo, and we'll put that in here is green. Hopefully, it becomes support. But if instead, what we see happen with the semiconductors, and that will be important for the rest of the market, if we come down the five-day moving average like this on Monday, that's great. Carve out a higher low. Maybe shake out below this a little bit. Scare people. And then get going. But if instead, we get trapped below the anchor from that low, then it's highly likely we come back down towards that 500 level. Right now, the pieces of the puzzle are not clear. So when they're not clear, it says just continue to go slow. If you're day trading, fantastic. But you don't chase gaps open, of course. Look at this big gap higher here today. And it looks more dramatic when we zoom in on it a little bit. But the gap from 5.60 came all the way down to 5.35 here this morning. So there's a lot of volatility for skilled traders. But the pattern remains here exactly what we've been talking about. Lower highs and lower lows below a declining 20- and 50-day moving average. But if you switch over to, let's say, a weekly time frame, we still have a healthy-looking market here that found buyers along the 20-week or 100-day moving average, which is above the 31-week, 150-day and the 42-week, 200-day moving average. So what is your time frame is the key. You might have a longer-term time frame, but these are painful drawdowns, of course. And as a swing trader, my job is to say, where are the opportunities? Has Micron made what looks to be a durable low? No, not yet. Not to me. We still have that declining 5-day moving average there. We had that big gap up that failed today. Let's, again, put that anchor back on the Leo low. And you can see that from the low of the Wednesday close, the semis are, I'm sorry, Micron is below that. And this is supposedly the real strong one because of the earnings up here. But the pattern remains uninterrupted, which is lower highs and lower lows. So while we have that on the daily time frame, you have to look at this and say, hey, these are great bounces. But that's it. Treat it as a bounce until proven otherwise. You're not going to get the low. The only people that got the low this week bought on the close on Wednesday. And that was Ken Griffin and Citadel. But everyone else had to chase the last two days. Now, on average, the participants who chased are losing money in Micron. Not in the whole market, not in every stock. But how about in Sandisk? In Sandisk, too. Is Sandisk, what is, you know, what's the trend here? We still have lower highs and lower lows. We came down to the year-to-date anchor and the important round number of 1,000. But this is a very clear pattern. It doesn't get any clearer in terms of the definition of trend is, a downtrend is lower highs and lower lows. So, again, here, maybe we even come down, undercut this briefly, then start to stabilize. And maybe then the market can start to recover a little bit better. But for right now, the people who are calling that the low, it's a low, that's for sure. But to say with confidence it's a low is similar to saying with confidence, hey, I'm going to hold all my stocks on four times leverage up in here because I'm up 400%. Understand risk and risk management. That's the takeaway for everyone who is, you know, looking at this situational fund. Anyways, in its aftermath, if we look at mags, they were up today and this, you know, had a difficult week. I mean, it was up on the week, but it had difficulty because if we look at the components, Apple today down 7%. But at the same time, that was offset by Amazon up 15%. What about yesterday? Yesterday, we saw Micro, I'm sorry, Meta down big on earnings, but Microsoft up big on earnings. So we're going back and forth in a lot of these. And the market cap moves is just incredible for these, you know, the magnitude of these moves is incredible in terms of the amount of money that's moving rapidly through these markets. Netflix still, you know, still in a downtrend. How about Palantir still in a downtrend? It's not, it's, you know, people are always in a hurry to buy the former winners and you will get big rallies that make you think, hey, that was the low. But when they come into important levels, like a declining 200 day moving average, they're typically going to get sold into. We've been talking about that for months now. SpaceX seemed like maybe it's stopping going lower for a little bit because it got above the flat five day moving average, but it's just a mess. It's in a longer term downtrend. If you're looking at low risk, high probability trades, you look for trend alignment. So you look for a stock in an uptrend to continue to be an uptrend, a stock like Datadog that's in a nice uptrend to be able to continue or Vsat to break through here and continue to move higher. So the semiconductors, they still have a cloud hanging over them. And that cloud is the declining 20 and 50 day moving average and the pattern of lower highs and lower lows. It doesn't mean it can't change. It doesn't mean I'm bearish. I'm neutral here. I'm going on vacation. I really don't even care, truthfully. Biotech stocks, this was the group that I've been looking for the possibility of a turn. Last week, we saw that we got stuck below that declining five day moving average and stuck below the declining 20 day moving average. So the odds of it rallying have diminished greatly. We got above the five day moving average this week, only so briefly, but that direction of the five was declining and that's below the 20. Now, next week, we could see that this level in here comes to be important possibly because one, it's the widely watched 50 day moving average. That's that dashed blue line and the anchor off of this may low right here comes together in that same exact place. We could also put a Fibonacci on that and say, well, look at that. That's a 50% retracement of that move. So maybe there are Fibonacci buyers in there. Maybe there are 50 day moving average buyers in there. Maybe there are anchored VWAP buyers in there. Maybe there's a lack of sellers in there. So it becomes, you know, when we have a confluence of important technicals in the same place, it becomes a more likely level that could become support. But it just tells us it's a level of interest to different participants on different timeframes for different reasons. So then we say, okay, if our job is to identify the idea on the daily timeframe, we then want to look to the shorter term timeframe. In this case, these are 30 minute bars and this is the five day moving average. We want to look for actual evidence that the buyers are gaining control. Do we have that evidence? Not with a wrong tool there. Not with a declining five day moving average. As long as this five day moving average is declining, you eye it with a view of suspicion. What if we rally up like this on Monday? Well, the five day moving average will begin to flatten out. So what I would look for if I was going to be trading, which I'm just so happy I'm not because I'm looking forward to this vacation. But anyways, if it rallies up there, pulls back and then finds buyers along that five day moving average on Tuesday, the five day moving average will be flat to advancing. Then if it makes the higher high here, well, then you could put your stop below this higher low or under here. Maybe split half of your stop under here, half of your stop under there. And you don't buy the break of this high. You buy the renewed momentum above that rising five day moving average. And you look at it and say, where does it have the potential to go before it's likely to encounter a source of supply that might become resistance? Well, so far, the anchored view app from the high of the year has been a place where we've approximately seen supply. So that becomes a level of interest. It doesn't mean it's a price target. It means if it gets up there, start to tighten some of your stop because it may reverse and you want to be out here rather than sucking your thumb wondering what happened. If instead it builds a higher low there and continues higher, well, then you raise your stop up and you see what the market will give you. Then you're aware of the next level of interest. That would be the 20 day moving average. And then you could say, okay, well, if that was the low from the high to the low, we put on maybe the Fibonacci and say, maybe it's going to get up and retrace 61.8% of this decline right here. So that's how you use these technical tools to formulate your plan and look at it and say, here's the plan. Now what I need is I've anticipated the potential play. Now I need to wait patiently and get the evidence from the market. Not from my feelings, but the evidence from the market that the buyers are regaining control. I want to be a chicken. I want to, I don't want to go first. I don't want to be the guy who jumps off the cliff and hits the rock. I want to see five people jump off that cliff safely and then I'll go. And that's the same as trying to pick a bottom. I'm not going to dive into the cliff, into the water off the cliff head first and hit my head in a rock and sit in a wheelchair for the rest of my life. I want to see it be safe. And once the buyers, everyone's gone safely and says it's good, then I know that I have my safety net underneath me in case I fail or the move fails. Then I move to the sidelines. It's just that simple. Financial stocks were higher this week. They continue to ride that rising 20-day moving average. Bonds got a lot of talk because they made a new low. And this is, you know, they're in a downtrend. They're below a declining 20, 50, and 200-day moving average. We spoke about that a couple weeks ago saying, look at where they've come from. Back there, they had their measured move right into the 200-day moving average. We had a confluence of technical indicators come together that became a level of interest. And from that level of interest, this market fell apart. It made its lower low under the five-day moving average here. And it was below declining five-day moving average. And then it gapped up and trapped some people. And over here, you know, it's in a downtrend. Why would you want to even try to buy this thing? Anyways, the energy names, I don't know how to trade energy names, generally speaking, because they are commodity names. But I certainly don't want to attempt to do it during a wartime environment either. So I don't understand people trading those. You know what? Let's take a real quick look at gold. Gold's doing nothing. It's maybe consolidating on the anchor from this 2024 low. But consolidating isn't bullish. It's just waiting to be bullish. Or if it breaks down, it means it was waiting for more supply. We don't know. There's no reason to wait to be the first one involved in here and think you're getting a bargain. Who cares if you pay $371 or $382 if you think it's going back to new highs? And we want to see these longer-term moving averages do this. Maybe gold isn't in a sustainable uptrend until the first quarter of 2027. But right now, it just doesn't look like there's any advantage with a declining 50, below declining 200-day moving average. That'll do it for me, everyone. You know what? We ought to take a look at Bitcoin. So let's do that real quick here. Bitcoin continues to be uninspiring. I have no position there. It's trying to hold along the anchor off of the June low. And was that May or June? Ethereum also just kind of stalled out in here up against that anchor from this bounce high. And the anchor off that prior low. Solana also just kind of trying to hang along that anchor off the low. They just seem like dead money to me, and I personally don't have an interest in them. Have a good week next week.