Zillow Group, Inc. (ZG) has faced a lot of headwinds in 2021. It pulled the plug on its home flipping segment, Zillow Offers, a big revenue generator. That hurt the company’s bottom line, but, since then, Zillow Group has exhibited signs of turning around. It’s made technological strides by offering a cool app and is experimenting in the AI space to create a user experience that eases the home search process.

ZG and Zillow Group Class C Shares (Z) were two stocks that made it to the StockCharts Technical Ranking (SCTR) scan on June 6. The stock has been trending higher, bouncing off its 100-day moving average (MA), but it’s worth looking at its weekly chart to see how much upside potential the stock has.

CHART 1: WEEKLY CHART OF ZILLOW STOCK. As long as the trend is up, the stock price has a lot of upside potential.Chart source: StockCharts.com (click chart for live version). For illustrative purposes only.

After peaking in February 2021, Zillow’s stock price plunged, reaching a low in October 2022 that was close to its March 2020 low. Since October, the stock price has been rising and is trading above its 50-week MA. The 100-week MA is still trending lower, and the 200-week MA is relatively flat. These moving averages can act as support and resistance levels. Note that the 20-week MA is, at the moment, acting as a short-term support level.

Is the stock one to add to your portfolio? Let’s look at the daily chart.

Zeroing In: Daily Price Action in Zillow Stock

The 50- and 100-day MAs are trending upward, which is a positive sign for the stock. Looking at the one-year daily chart, the stock is approaching a short-term resistance level of around $48, its most recent high (see chart below).

CHART 2: DAILY CHART OF ZILLOW. Upward trending moving averages, SCTR > 70, and relative strength with respect to the S&P 500 index all indicate the stock has upside potential.Chart source: StockCharts.com (click on chart for live version). For illustrative purposes only.

The SCTR score has been above 70 since March 20, and its relative strength with respect to the S&P 500 index is in positive territory. Overall, ZG is showing strength. If the stock falls below its 100-day MA and stays below it, then the uptrend would no longer be in play.

How to Trade Zillow Stock

You may need to exercise some patience if you’re considering entering a long position in ZG or Z. If the stock trades above its most recent high of $48, it would validate the uptrend.If price pulls back after reaching a new high above $48, then continues moving higher on above average volume, that would make a good entry point signal. For your price target, you’d have to look at the weekly chart to determine the first resistance level. It would probably be the 100-week MA. As long as the pattern of higher highs and higher lows continues, you want to stay in the trade. In the case of ZG, if the stock moves to the 100-week MA, stalls, and drops below the 20-week MA, you may think about exiting the trade. If the stock moves above the 100-week MA, then your next target would be at the 200-week MA.Keep an eye on the SCTR and relative strength on the daily chart .As long as the SCTR remains above 70 and relative strength against the S&P 500 index continues trending higher, your long position can remain in play. Use trailing stops to determine when to exit the trade. And if you have a significant position size, you can take profits on some of your positions instead of the entire investment in the stock.

Other Stocks From the Scan

Here are some of the other stocks that showed up on the large-cap SCTR scan. Do you detect any industry trends? 

American Express Co.  (AXP)

Baidu (BIDU)

Discover Financial Services (DFS)

Expedia, Inc. (EXPE)

Hyatt Hotels Corp. (H)

InterContinental Hotels Group PLC (IHG)

Marriott International, Inc. (MAR)

Looking Back at DOCU

On June 1, Docusign, Inc. (DOCU) was the featured SCTR scan stock. Let’s look at how that stock is performing.

CHART 3: DAILY CHART OF DOCU. Conditions are valid from last week. If you opened a long position, be aware of market conditions so that you know when to exit your position.Chart source: StockCharts.com (click on chart for live version). For illustrative purposes only.

The SCTR is still moving higher, as is the relative strength with respect to the S&P 500 index ($SPX). The Cup with Handle (er, teapot) pattern is still in play. And the stock has broken above its $58.80 resistance level, although volume could be higher. So the conditions from last week are still valid.

SCTR Crossing Scan

[country is US] and [sma(20,volume) > 100000] and [[SCTR.large x 76] or [SCTR.large x 78] or [SCTR.large x80]] 

Credit: Greg Schnell, CMT, MFTA.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

“The farther backward you can look, the farther forward you can see.” – Winston Churchill

In this exclusive StockCharts TV special, Larry is back to talk about a stock market correction ahead. There have not been any long term selling opportunities recently. However, right here & now, Larry thinks there will be a market correction, despite some people predicting bad news that, in reality, has not come true.

This video was originally broadcast on June 6, 2023. Click anywhere on the Larry Williams photo above to view on our dedicated show page, or click this link to view the episode on the StockCharts YouTube channel. You can also check out this and past Larry videos on the StockCharts TV on-demand website, or on the associated app on mobile platforms like iOS and Android, or TV platforms like Roku, Apple TV, Amazon Fire TV and Chromecast.

New Larry specials will air periodically on StockCharts TV. All previously recorded episodes are available at this link. You can also visit Larry’s website at www.ireallytrade.com.

It’s tempting to think of Bearish Engulfing patterns as the negative counterpart to the Bullish Engulfing pattern because, technically, they sort of are. But the Bearish Engulfing pattern also presents a trading opportunity that’s unique to the downside: Stocks tend to fall three times faster than they rise.

Why is that, exactly? Investors tend to prioritize the fear of loss over the pursuit of gains (according to trading psychology). What does that mean? For traders willing to short a stock, your chances of catching a short but significant plunge may be greater than catching a sharp upward spike.

And Bearish Engulfing patterns carry exceptionally favorable stats. But more on that soon. For now, let’s go over the basic characteristics of this pattern.

What are the Characteristics of a Bearish Engulfing Pattern?

A bearish engulfing pattern is a two-candlestick pattern that signals a potential reversal from a bullish trend to a bearish trend. Here are its key characteristics:

Existing uptrend. Before the bearish engulfing pattern occurs, there should be an existing uptrend. This pattern is a reversal pattern, so it needs an upward swing to reverse.First candle bullish. The first candle in the bearish engulfing pattern is bullish (white or green candle), which is part of the ongoing uptrend.Second candle bearish. The second candle is bearish (black or red) and “engulfs” the first candle’s real body. This means the opening price of the second candle is higher than the closing price of the first candle, and the closing price of the second candle is lower than that of the first candle.Second candle should be much larger. The bearish (second) candle must be larger than the previous bullish (first) candle. The larger the second candle, the more significant the reversal signal is.High trading volume to support the reversal. A higher trading volume during the session that forms the bearish candle could indicate stronger selling pressure, enhancing the reversal signal.

According to technical analyst Thomas Bulkowski’s studies, the Bearish Engulfing pattern is followed by a bearish reversal 79% of the time. Its best percentage of meeting its price target occurs during a bear market, at 76%. Overall, the Bearish Engulfing pattern presents some compelling stats, and if you want to take a deeper dive, check out Bulkowski’s book Encyclopedia of Candlestick Charts.

How To Scan for Bearish Engulfing Patterns

Go to Member Tools > Scroll Advanced Scan Workbench > New

Copy and paste the following code: 

[type = stock] 

AND [country is US] 

AND [[exchange is NYSE] OR [exchange is NASDAQ]] 

AND [market cap > 100] 

AND [Daily Bearish Engulfing is true] 

AND [Uptrend is true] 

AND [Daily SMA(20,Daily Volume) > 500000] 

Once the code is entered, click Run Scan.

The scan yielded several results. The most well-known stock on the list is Amazon (AMZN), so let’s take a look at that.

Bearish Engulfing Candlestick Signals AMZN Pullback

Take a look at the $104 to $106 price range in the chart below.

CHART 1: BEARISH ENGULFING PATTERN IN AMAZON STOCK CHART. A divergence between price highs and the stochastic oscillator indicates that AMZN may see a trend reversal. There’s also a Golden Cross in the 50- and 200-day moving averages.Chart source: StockCharts.com (click on chart for live version). For educational purposes only.

Notice the Bearish Engulfing candle pattern. The divergence between the consecutive price highs and the lower highs in the overbought region of the Stochastic Oscillator is a red flag that price is likely on the verge of a reversal. The MACD hasn’t confirmed this, but it tends to lag, so just keep an eye on it.

Should AMZN begin pulling back, what might it pull back to? Notice that the Golden Cross event at the end of May shows the extension of two moving averages—the 50-day SMA and 200-day SMA—that can serve as potential support levels. Underneath these averages is a thick and rising layer of Ichimoku cloud. In addition to indicating buying pressure, a bullish sign especially when thick, the green cloud also acts as potential support. Converging with this range of support (between $104 to $106) are the largest Volume by Price bars, indicating both heavy trading activity and potential support.

If you look at a 12-month chart (see chart below), you can see that the support range also coincides with the 50% to 61.8% Fibonacci Retracement levels starting from the second leg of AMZN’s uptrend, and that $105 has a long history as both support and resistance (fuchsia circles).

The Ichimoku cloud and 200-day SMA are on the chart for reference (to compare with chart 1).

CHART 2: ONE-YEAR CHART OF AMZN. Here, you see the horizontal line that represents historical support and resistance levels. The Fibonacci retracement levels, starting at the second leg of the most recent uptrend, show that the 61.8% retracement is close to $105.Chart source: StockCharts.com (click on chart for live version). For educational purposes only.

How Do You Trade a Bearish Engulfing Candle?

CHART 3: TRADING AMZN. Here you see the entry, profit target, and stop loss for a short position.Chart source: StockChartsACP. For educational purposes only.

On the following trading day (assuming the engulfing pattern remains intact), you would place a short entry right below the low of the engulfing candle;You’d place a stop loss at the top of the formation (either the engulfing candle of the candle before it, whichever is taller);Your profit target would either be a 100% measure of the entire formation (a one-to-one risk/reward approach); orYou would exit at the closest support level.

Say AMZN closed at $122.60 (see chart below). The high is $127.36 and the low is $121.70. The total risk would amount to $5.65. For the shorter-term trade, you would take the dollar-value measure of this pattern’s height and subtract it from the bottom, giving a price target of $116.05 to cover your short position.

The second, further target would be the near-term support at $115 and the $104-to-$106 range, as pointed out in the charts above.

Other Stocks in the Scan

Here are some other notable stocks and exchange-traded funds (ETFs) that showed up on the scan.

ProShares UltraPro QQQ (TQQQ)

Invesco QQQ Trust (QQQ)

Adobe Systems, Inc. (ADBE)

Shopify, Inc. (SHOP)

MetaPlatforms, Inc. (META)

Looking Back at Walmart’s Bullish Engulfing Pattern

Last week’s article discussed the bullish side of this same candlestick pattern. The stock in focus was Walmart (WMT). Similar to the trade setup above, the “measured” profit target had the best chance of succeeding. Let’s take a look at how it did.

CHART 4: A WMT TRADE. The profit trade was reached three trading days ago.

Set a profit target based on the formation height (147.31 – 145.01 = 2.30). Add the 2.30 to the top of the formation. This gives you $149.61, which was reached three sessions later.

The Bottom Line

Because markets tend to fall faster than they rise, trading the short side of the market can sometimes present sudden and dramatic opportunities. Bearish Engulfing patterns may not be surefire signals of a decline, but they come pretty close, as their stats—a 79% bearish reversal rate—seem pretty compelling. Good luck and happy trading!

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The U.S. trade deficit widened to a 6-month high and by the most in 8 years. That means that we imported way more goods while our exports declined.

Now, we don’t like to use one economic stat as the end all be all, but this does indeed strengthen our stagflation outlook. The Dollar’s recent strength is a factor as well. Looking ahead, the west coast port labor potential strike could hurt both imports and exports in the coming months.

Meanwhile, the chart shows us another interesting trend, one that we have dubbed as the “sleeper trade” for 2023 and beyond. Since we in the U.S. have rising imports, these charts illustrate where we (and other countries) are going for cheap labor and goods. And it is not just to China.

Note the declining dependence on China and the rising dependence on Vietnam for imports.

This is a weekly chart using the ETF VNM for Vietnam.

About the ETF

VNM extends beyond firms domiciled in Vietnam to include non-local companies generating at least 50% of revenues in Vietnam. In doing so, VNM adds exposure to different sectors via companies in other regions. It’s a broad take on the Vietnamese market for those seeking a pure-play fund.

Finance is the top sector in the ETF basket at 51.95%, followed by Consumer Non-Durables at 16.62%. The blue line is the 23-week moving average. Should that clear and confirm by the end of this week, that is a phase change to Recuperation. The last time VNM traded at these levels was the week of January 23rd when the high was 13.17. Should the price hold the phase change and take out the 2023 highs, we will consider that a more bullish sign.

Our Real Motion Indicator tells us that momentum has also cleared its 50-week moving average. Price and momentum are moving in tandem. Nothing pleases us more than when fundamentals and technicals line up.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

The US dollar rallied following a positive US jobs report last Friday, but could the Federal Reserve’s upcoming interest rate decision halt the greenback’s rise? Mish offers her views on USD/JPY, the S&P 500, and light crude oil futures on CMC Markets.

Mish talks GME (Gamestop) and more on Business First AM.

Where is the US economy actually heading? Rajeev Suri of Orios discusses this question and what trends suggest with Mish in this video.

Mish joins Rajeev Suri of Orios Venture partners to discuss the Fed, inflation, and buybacks in this video on LinkedIn.

In this episode of StockCharts TV’s ChartChats, Mish Schneider and TG Watkins (creator of the Moxie Indicator) sit down for a candid chat about working with other StockCharts contributors. Learn what TGs strategy for trading is, and how the the Moxie Indicator came to be. Mish shares her background and how she got started in the industry.

With Congress having reached a deal after months of debt ceiling talks, what direction could the US dollar move in, and what could this mean for the USD/JPY? Mish explores the market movements in this appearance on CMC Markets.

Mish joins Rajeev Suri of Orios Venture partners to discuss the trend toward a risk-on situation in this video on LinkedIn.

Mish weighs in on the overnight slump across the board on the benchmarks and where the momentum is heading on Singapore Breakfast, available on Spotify.

Mish explains how reversal patterns could come to the fore this week in this appearance on CMC Markets.

Mish joins Rajeev Suri of Orios Venture partners to discuss the possibility of economic stagflation in this video on LinkedIn.

Mish discusses how AI is being used to invest in this article for BNN Bloomberg.

Coming Up:

June 8: Mario Nawfal Twitter Spaces, 8am ET, & Wolf Financial Spaces

June 12: BNN Bloomberg Opening Bell

June 13: Daily Briefing on Real Vision

June 22: Forex Premarket Show with Dale Pinkert

June 23: Your Daily Five on StockCharts TV

ETF Summary

S&P 500 (SPY): August 2022 high 431.73, and of course 420 now key.Russell 2000 (IWM): 180 now must hold while still miles from its 23-month MA 193.Dow (DIA): 23-month MA 337 pivotal and closed right there.Nasdaq (QQQ): Big correction as Canada hikes rates; also somewhat saturated index. 350 pivotal with the close below.Regional Banks (KRE): 45.50 significant resistance.Semiconductors (SMH): 142.50 the 10-DMA; if breaks, still looking at 138-140.Transportation (IYT): 233.50 is significant resistance.Biotechnology (IBB): 121-135 range.Retail (XRT): 60 now support and 63 resistance.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

In this week’s edition of Trading Simplified, Dave shows his methodology in action with a recent “better-than-a-poke-in-the-eye” crypto trade and an open stock position where he’s “free rolling”, which is the secret to longer-term trading success. He then resumed his series on the wisdom of Jesse Livermore, focusing on how, while it’s good to have an opinion on where a market is headed, you better wait for the tape to confirm. He talks the need to be patient before and during a trade, learning from your mistakes, plus much more.

This video was originally broadcast on June 7, 2023. Click anywhere on the Trading Simplified logo above to watch on our dedicated show page, or at this link to watch on YouTube. You can also watch this and past episodes on the StockCharts on-demand video service StockChartsTV.com — registration is free!

New episodes of Trading Simplified air on Wednesdays at 12:00pm ET on StockCharts TV. You can view all recorded episodes of the show at this link. Go to davelandry.com/stockcharts to access the slides for this episode and more. Dave can be contacted at davelandry.com/contact for any comments and questions.

The equal-weighted S&P 500 ($SPXEW) continues to advance above its key 50-day moving average which it broke above following last Friday’s broad based rally in the markets. Friday’s downtrend reversal took place after May’s employment data delivered a goldilocks report with job openings rising higher than expected while wage gains were modest. The report helped reduce fears of a recession amid signs of corporate job growth while low wage gains underscored the possibility of a more accommodative Fed.

Cyclical stocks gained on the news, as the hint of possible economic expansion pushed Materials, Industrials and Discretionary stocks higher while Small Caps gained the most amid a rally in Bank stocks. I highlighted this marked shift in my Sunday MEM Edge Report as a broadening out among participation is very constructive for the possibility of a more sustained uptrend in the markets.

DAILY CHART OF S&P 500 EQUAL WEIGHTED INDEX ($SPXEW)

Today we’ve seen a continuation of last week’s broadening out into areas beyond Technology and mega-cap FAANMG names. Most pronounced has been the continuation rally in Small Cap stocks. While a portion of the gains can be attributed to the recent rally in Bank stocks – Financial Service stocks account for 13% the Russell 2000 – other areas in small cap stocks are also on the move. The biggest gainers today were beaten down Retailers with other cyclical areas such as Industrials not far behind.

DAILY CHART OF RUSSELL 2000 ETF (IWM)

One characteristic of a move into Small Cap stocks is that it signals a risk-on appetite among investors which is a positive. While these smaller stocks can produce outsized returns when sparked, they’re more volatile than larger, more liquid names so tight stops are strongly recommended on any new positions.

My twice weekly MEM Edge Report will be adding several new stocks to our already broad Suggested Holdings List tomorrow. These fundamentally sound companies with attractive charts can be accessed by using this link here and trialling my report for a nominal fee. You’ll have immediate access to recent reports as well as my Watch List of stocks getting ready to move higher. I hope you’ll take advantage of my special offer so you can take advantage of the current rotation as it continues to take shape.

Warmly,

Mary Ellen McGonagle, MEM Investment Research

In this edition of the GoNoGo Charts show, Alex and Tyler review the recent breakout from the downward-sloping trendline of the Russell 2000 (IWM) and “Go” trend conditions on the daily basis, and neutral trend conditions on the weekly chart. Picking out several individual equities in the small-cap growth space, they see opportunities in artificial intelligence, software companies and biotech shares ($AI, $VTSI, $BLND, and $XBI).

This video was originally recorded on June 8, 2023. Click this link to watch on YouTube. You can also view new episodes – and be notified as soon as they’re published – using the StockCharts on demand website, StockChartsTV.com, or its corresponding apps on Roku, Fire TV, Chromecast, iOS, Android, and more!

New episodes of GoNoGo Charts air on Thursdays at 3:30pm ET on StockCharts TV. Learn more about the GoNoGo ACP plug-in with the FREE starter plug-in or the full featured plug-in pack.

Charles H. Dow declared the importance of closing prices, particularly over longer timeframes. In last week’s edition of the GoNoGo Charts show, we take a look at some monthly charts to gain perspective on current market moves and provide context to the rangebound consolidation of both US Equities and Treasury Yields.

Looking at the relative performance of US indices, we can see the outperformance of growth over value (QQQ:DIA). Under the hood of the rising S&P 500 (SPY) – which is currently in “Go” trend conditions on a Daily, Weekly, and Monthly basis – we see strong relative outperformance from three sectors: Information Technology (XLK), Consumer Discretionary (XLY), and Communications (XLC). Highlighting a few key leaders on a daily basis, Alex and Tyler discuss the concept of polarity, as many charts broke above resistance and are now retesting the same price levels for support. Namely, mega-cap growth companies from the three leading sectors in “Go” trends on their respective daily charts include Apple, Amazon, Nvidia, Tesla, and Meta. Noting that technical analysis provides a toolkit that can be applied on any timeframe, Alex and Tyler move to intraday 30-minute bars to see risk management and alpha capture scenarios in Lucid Group, SoFi Technologies, and Carvana.

This video was originally recorded on June 1, 2023. Click this link to watch on YouTube. You can also view new episodes – and be notified as soon as they’re published – using the StockCharts on demand website, StockChartsTV.com, or its corresponding apps on Roku, Fire TV, Chromecast, iOS, Android, and more!

New episodes of GoNoGo Charts air on Thursdays at 3:30pm ET on StockCharts TV. Learn more about the GoNoGo ACP plug-in with the FREE starter plug-in or the full featured plug-in pack.

On this week’s edition of Stock Talk with Joe Rabil, Joe shows how ADX can help us identify topping patterns. Tops can take place in the form of a climax or in the form of exhaustion or momentum loss, and Joe explains how ADX can help to see both of these patterns. He then covers the stock symbol requests that came through this week, including AAPL, NFLX, and more.

This video was originally broadcast on June 8, 2023. Click this link to watch on YouTube. You can also view new episodes – and be notified as soon as they’re published – using the StockCharts on demand website, StockChartsTV.com, or its corresponding apps on Roku, Fire TV, Chromecast, iOS, Android and more!

New episodes of Stock Talk with Joe Rabil air on Thursdays at 2pm ET on StockCharts TV. Archived episodes of the show are available at this link. Send symbol requests to stocktalk@stockcharts.com; you can also submit a request in the comments section below the video on YouTube. Symbol Requests can be sent in throughout the week prior to the next show. (Please do not leave Symbol Requests on this page.)