Notes from Chart Guys video: Chart Guys Market Evaluation
Summary of Dan’s (The Charting Man) market evaluation from vacation. All credit goes to The Chart Guys for the original analysis and insights.
The Big Picture
After 6 consecutive days of lower highs (stairstep drop from all-time highs), we’re at a critical level:
NASDAQ weekly EMA 12 being tested - This level has held multiple times over the last 6 months.
If lost, it would signal the first major shift in trend control in half a year.
Context: What started as normal healthy consolidation turned more severe. Longest government shutdown ever is creating the narrative for selling.
Government Shutdown: Bear Trap Setup?
The headline: “Longest government shutdown ever”
Poly market probabilities:
- 50%+ probability of extending past November 16th
- Only ~10% probability of resolution over the weekend (Nov 8-11)
The setup: Senate working through the weekend creates potential for a bear trap
If a deal is announced Sunday night/Monday morning, we could see a significant gap up that traps short sellers.
Why this matters: Headlines drive short-term price action. Government shutdown is the current excuse for selling. Remove the excuse = remove the selling pressure.
Technical Breakdown
NASDAQ - The Critical Chart
Weekly Time Frame:
- Weekly EMA 12 being tested on the bounce from lows
- First clear test of this level in 6 months
- Losing this = major trend shift
Daily Time Frame:
- 6 days in a row of lower highs (clear stairstep drop)
- Wednesday’s low broke = key support failed
- Breaking Wednesday’s low = red flag for bulls
- Daily lower high most likely on next bounce
4-Hour Time Frame:
- Clear 4-hour equilibrium Tuesday with tight inside bars
- Bear break was clean and controlled
- 4-hour downtrend has been impressive
Hourly/15-Minute:
- Friday bounce started late morning
- 15-minute EMA 12 held as support Friday afternoon (critical back-test)
- Bulls held this into close = hourly bounce has momentum
- Need to confirm hourly uptrend for bounce follow-through
Sector Rotation: The Silver Lining
Not all sectors are weak. This is important:
Strong (Green on the week):
- XLF (Financials): Sideways for a month, tightening range will break in next couple weeks
- XLV (Healthcare): Green and closing near 6-month highs
Weak:
- Semiconductors and big tech leading the way down
- Weight of tech/semiconductors offsetting other sector strength
Why this matters: Rotation is actually a positive sign for bulls.
If the bounce gets going with all sectors participating:
- XLV could hit new 6-month highs quickly
- XLF could break tightening range bull and test all-time highs
This is different from broad-based selling where everything goes down together.
My Trading This Week
Mostly cash due to stops being hit during the weakness:
Meta (META):
- Stopped out break even around $625
- Played Tuesday’s gap down for hourly bounce
- Sold 2/3 into initial bounce, stopped out on rest
- Still interested in bounce plays with space to move
Tesla (TSLA):
- Was playing potential weekly cup and handle
- Sold position around $450 due to shareholder vote risk while on vacation
- Now watching sideways range between $414-$470
CRML (Critical Metal):
- Traded gap down morning, played hourly bounce
- Sold 2/3 into initial bounce, stopped out on rest
Quantum Names (NQ, QBTS):
- NQ: Little double bottom at $50, weekly EMA 12 is support
- QBTS: Double bottom at $26.37 (held by 5 cents), weekly EMA 12 support
- Can go up 30% from here and still set weekly lower high
- Still seeing double-digit moves both directions (great for day trading)
Approach: Not doing much trading while on vacation. Letting stops manage risk.
Commodities Update
US Dollar
- Resistance at $126, topped at $136
- Starting pullback
- Daily uptrend still intact
- Watching for daily uptrend loss (would benefit metals)
Silver
- Daily inverse head and shoulders pattern forming
- Resistance in low $49s
- Tightening up = volatility coming
- Weekly higher low off EMA 12
- Still holding long position
- Weekly EMA 12 support = bulls have complete control
Gold
- Weekly EMA 12 holding (same as silver)
- Little weekly inside bar
- If breaks bull this week, higher low is set
- Could trade sideways into December then break
Natural Gas (UNNG)
- At highest level in months
- CAUTION: Potential megaphone pattern
- Bull break with no follow-through, then bear break with no follow-through
- Key level: $13.52 - if breaks, confirms another false breakout
- If holds above $13.52, bounce continues
What Bulls Need (Near-Term)
Sunday Night Futures: Watch for potential gap up if government shutdown resolved over weekend
Monday: Confirm hourly uptrends in individual names
Daily: Start getting daily bounces, then watch for daily lower highs
Weekly: If daily downtrend confirmed, weekly EMA 12 will likely be lost (major shift)
What Bears Need (For Monthly Consolidation)
Step 1: Confirm daily downtrend (daily lower high on next bounce)
Step 2: Break weekly EMA 12 support
Step 3: Government shutdown continues (adds doubt/fear)
If all three happen: Monthly consolidation becomes significantly more likely.
After 7 green months and 40-50% straight up move, monthly consolidation should not be surprising.
Contrarian Take: Seasonality Surprise
Everyone expects: Seasonality run into end of year (historically likely)
Contrarian thought: What would catch the market most by surprise? → Monthly consolidation to end the year
Going red in November or December into monthly consolidation would surprise many.
What’s required:
- Confirm daily downtrend (step 1)
- Lose weekly EMA 12 support
- Monthly consolidation becomes the narrative
Not predicting this, but worth considering as a possibility.
Key Concept: EMA 12 Rider
Understanding the EMA 12 across timeframes:
15-minute EMA 12 = Short-term control
- As long as it’s resistance, bears have full control
- Break above = probabilities shift to bulls
- Back-test and hold as support = confirms uptrend
Hourly EMA 12 = Next level of confirmation
Daily EMA 12 = Trend confirmation
Weekly EMA 12 = Major trend control (where we are now)
What To Watch Next Week
Critical levels:
- NASDAQ weekly EMA 12 (current support)
- Wednesday’s low (already broken = red flag)
- Friday’s low (bulls need hourly higher lows vs this level)
Scenarios:
Bull case:
- Friday’s low holds
- Hourly uptrends confirmed Monday/Tuesday
- Rotation continues with all sectors bouncing together
- Government shutdown resolved (removes headline risk)
Bear case:
- Confirm daily downtrend (daily lower high on next bounce)
- Lose weekly EMA 12 support
- Government shutdown drags on (cloud over market)
- Monthly consolidation narrative takes hold
Bottom Line
Impressive 4-hour bear control throughout the week. Normal consolidation + government shutdown narrative = enhanced selling.
Testing weekly EMA 12 for first time in 6 months - this is the line in the sand.
Current state: Not trading much from vacation, increasing cash as stops hit, ready to re-engage when hourly uptrends confirm.
Watch closely: Government shutdown headlines tied to short-term price action. Resolution could trigger bear trap with gap up.
Probabilities shift IF: Daily downtrend confirmed + weekly EMA 12 lost = monthly consolidation becomes significantly more likely.
After 7 green months straight, some consolidation would be normal. Question is: does it start now or do we get one more push higher first?
Taking it day by day, monitoring key levels, staying technical.
Note: I’m a member of The Chart Guys private Slack community and highly recommend it for anyone serious about learning technical analysis.
This is my personal analysis for educational purposes only. Not financial advice. Trading involves significant risk including potential loss of capital.