Stock Market, Oil, Bitcoin, Gold Analysis for Week Ending 3/20/26

Key Concepts

• Anchored VWAP (AVWAP): A volume-weighted average price starting from a specific event (e.g., a gap, a low, or a tariff announcement) used to identify institutional support and resistance.
• Guilty Until Proven Innocent: A trading philosophy where assets in a downtrend are assumed to be bearish until clear evidence of buyer control (e.g., reclaiming moving averages) appears.
• Levels of Interest: Specific price points (often based on historical anchors or moving averages) where market participants should observe price action rather than automatically buying or selling.
• Measured Move Objective: A technical analysis pattern where the distance of a previous price leg (A to B) is projected from a new pivot (C) to estimate a target (D).
• Market Environment: The distinction between a "bear market" (a 20% decline) and a "bearish environment" (defined by declining moving averages and lower highs/lower lows).

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Market Analysis and Technical Outlook

1. General Market Sentiment

Brian Shannon emphasizes that the current market is in a bearish environment, characterized by a pattern of lower highs and lower lows. He argues that institutional investors are net sellers, as evidenced by the S&P 500 trading below the average participant's cost basis. He dismisses the "buy the dip" mentality, noting that every recent bounce has failed.

2. Key Asset Performance

• S&P 500 & NASDAQ: Both indices have broken below their 200-day moving averages. Shannon notes that these levels are "levels of interest," not automatic buy signals. He warns that the market is currently "guilty until proven innocent."
• Oil: Remains a standout performer. As long as oil stays above the $91–$92 range, it signals market anxiety regarding the geopolitical situation overseas, which keeps risk high for equities.
• Semiconductors: Shannon identifies a potential "head and shoulders" top. He highlights Nvidia as a case study where positive news (trillion-dollar revenue projections) failed to sustain price, leading to a breakdown. He projects a move toward 165 based on a measured move objective.
• Bonds: Yields on the 10-year Treasury have risen from 3.9% to 4.4%, which Shannon suggests will likely negatively impact the housing market.
• Bitcoin: After breaking below the anchored VWAP from the year-to-date low, the asset signaled a sell-off, confirming the bearish trend.

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Methodologies and Frameworks

The "Bounce Trade" Strategy

Shannon outlines a strict framework for trading in a bearish environment:

1. Avoid Early Entry: Do not attempt to "catch the bottom," as the bottom is a process, not a single event.
2. Use Moving Averages: If an asset is below a declining 5-day moving average, long positions should be restricted to day trades only.
3. VWAP Confirmation: On a one-day chart, if the price is below the daily VWAP, sellers are in control. Traders should wait for the price to cross and hold above the VWAP before considering a long position for a short-term bounce.
4. Wait for Flattening: For intermediate-term trades, wait for the 5-day moving average to flatten out before entering.

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Notable Quotes

• "It's better to be late and right than it is to be early and wrong."
• "The definition of a bear market is down 20%. What a foolish thing to think of. I don't care about bear markets. I care about the environment."
• "If good news can't make it go up, what on earth will?" (Regarding Nvidia's price action following positive earnings/guidance).

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Synthesis and Conclusion

The primary takeaway is that the market is currently in a state of structural weakness. Shannon advises against fighting the trend, noting that the "average participant" is currently losing money. He stresses that technical levels—such as the 200-day moving average or specific anchored VWAPs—are merely observation points. Traders should remain disciplined, avoid premature buying, and recognize that in a bearish environment, rallies are likely to be short-lived "bounce trades" rather than trend reversals. The focus should remain on price action and the behavior of moving averages rather than news-driven sentiment.