Getting Technical: Breaking down SPY and bitcoin at record highs
Joining Yahoo Finance's Akiko Fujita and Jared Blikre is Brian Shannon, CMT and founder of www.alphatrends.net, who breaks down the price action and levels of interest based on anchored VWAP for the SPDR S&P 500 ETF (ETF) and bitcoin, which surged above 20,000 to a record high.
Video Transcript
AKIKO FUJITA: Well, sentiment turning Uber bullish as stocks in Bitcoin hit record highs. So it pays to keep tabs on the market technicals. Lucky for us, we've got two who can break it all down for us today, Yahoo Finance's Jared Blikre joined by Brian Shannon, founder of alphatrends.net. Jared, take it away.
JARED BLIKRE: All right, Brian. Well, we've got the markets at record highs, as Akiko just said. My handle on Twitter is @spyjared, so let's break down SPY first. And we have that up on the YFi Interactive with your anchored VWAP levels. Just break it down the way you're seeing it right now.
BRIAN SHANNON: You know, I don't really think we have to overthink it too much, Jared. I think 2020 has been a great year for recognizing something that I always say, which is only price pays. And when the trend is higher, don't overthink it. Know where your exit points are, where your stops are.
Right now, the most recent level of interest in terms of a volume-weighted average price that has significance is off the low that we saw in November. That brings us down to about 360. As long as we're above that and we keep making higher highs and higher lows, again, I'm not going to overthink it. It's innocent until proven guilty.
JARED BLIKRE: All right, well let's shift gears here to another market that's making record highs. That, of course, is Bitcoin. That big breakout just happened today above 20,000. What are you seeing in Bitcoin right now, and what levels are you watching here?
BRIAN SHANNON: Same story, you know, we've got higher highs and higher lows. It's at all-time highs. A lot of-- we had a little bit of a pause at that 19.5 level, where we had spent just four days, actually, back in 2018. And we worked through that really well. I think that that now becomes a floor, basically, 19,000 to 20,000.
I heard your prior guest say, you know, someone was talking about this is a hundred-year hold. One, I don't think that person will be alive in 100 years, but the last time I heard that talk was from SoftBank with-- when they were investing in CMGI back in 1999, 2000. I think we take it maybe in little bite-size pieces, not in century, decade increments of time.
JARED BLIKRE: Yeah, I always love those long-term references. Maybe a contrary indicator, but maybe not, in this case. Could you break down anchored VWAP for us? I know it's an indicator that both you and I have been using, but some of the viewers might not know about it. And by the way, we also offer this for free on our web platform. It's one of the many indicators that we have here.
BRIAN SHANNON: Yeah, on the Yahoo Finance charts, it's great to be able to have that feature for free, as well, because this is a premium-level indicator. It's the volume-weighted average price. It's simply the average price from any point in time. You know, so we look at-- think of it as dollar cost averaging. When you buy a stock, maybe you buy $1,000 worth of Apple stock each month, well at the end of the year, what's your cost basis? That's your volume-weighted average price. So it's the average price based on volume from any point in time.
And when we look at, for instance, Bitcoin, we could see that this rally really took shape back about three months ago when it broke above 12,000. And as long as we're above the volume-weighted average price from that level, which is about 17,000, I think that you still give the benefit of the doubt to the buyers, and this 19,000 to 20,000 is probably our new level of support for this market.
JARED BLIKRE: All right, Brian Shannon of Alpha Trends, thank you for joining us. And I'm going to kick it back to you, Akiko.
BRIAN SHANNON: Thanks, Jared.
AKIKO FUJITA: Thanks so much for that, Jared. And thanks so much for that, Brian, as well.
