• 512 days Will The ECB Continue To Hike Rates?
  • 512 days Forbes: Aramco Remains Largest Company In The Middle East
  • 514 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 914 days Could Crypto Overtake Traditional Investment?
  • 919 days Americans Still Quitting Jobs At Record Pace
  • 921 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 924 days Is The Dollar Too Strong?
  • 924 days Big Tech Disappoints Investors on Earnings Calls
  • 925 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 927 days China Is Quietly Trying To Distance Itself From Russia
  • 927 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 931 days Crypto Investors Won Big In 2021
  • 931 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 932 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 934 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 935 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 938 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 939 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 939 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 941 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

SP500: A Storm is Coming

Monthly time frame:

  • There is a reasonable doubt If the bearish cross of the 10 m ma below the 20 m ma is going to have the same outcome like the 2000 - 2002 and 2007 - 2009 bear markets.
  • Even though the decline from the May 2015 high has unfolded a corrective pattern (3-wave down leg) which so far is suggesting a trading range that should lead to an extension of the rally from the 2009 low, nevertheless the sequence of lower lows/highs remains in force hence it should not preclude a significant correction first.
  • If SP 500 ends the month of May below the 10 m ma = 2013 odds should favor at least a Fibonacci retracement of the up leg from the February low (0.382 = 1996; 0.5 = 1961; 0.618 = 1925).
  • It is a difficult time to have a high conviction on the direction of the market however it seems probable at least a larger pullback

SPX Monthly Chart
Larger Image

  • Monthly oscillators are exceedingly negative: The RSI on September 2014 has broken through the trend line from the 2009 low. Since then the trend has been down. The MACD has a bearish signal cross in force since February 2015.

SPX Monthly Momentum Chart
Larger Image

Weekly time frame:

  • SP 500 ended the week with Shooting Star (Bulls have failed to break through the trend line from the July high) and a potential lower high. If next week S1 = 2039 does not hold then we would have the confirmation that the up leg from the February low is done. If this is the case, the favorable scenario for the Bulls would be a partial retracement followed by the resumption of the up trend.
  • Below 2039 we have the first support layer in the range 2025 (50 wma) - 2020 (Horizontal support) which I doubt it will hold. A "shallow" pullback would bottom at the 20 w ma = 1994. If this support also fails there is S3 = 1969 and S4 = 1947

SPX Weekly Chart
Larger Image

  • Weekly oscillators are bullish however both the RSI and the Stochastic are rolling down. If the RSI loses the 50 line and the Stochastic breaches the 80 line the MACD, which is already slowing down could top

SPX Weekly Momentum Chart
Larger Image

Daily time frame:

  • SP 500 is now below the 10, 20 and 50 dma (Bearish signal)
  • Price has carved out a potential Head and Shoulder with a measured target at 1965
  • If price breaks the neckline we shall see if the 200 dma holds (At least a potential bounce is probable)
  • If the Head and Shoulder plays out SP 500 must establish a bottom in the range 1965 - 1947 in order not to jeopardize the resumption of another up leg from the February low

SPX Daily Chart
Larger Image

  • Daily oscillators are bearish and pointing down. The RSI (14) is below the 50 line. If the MACD breaches the 0 line odds should favor a larger decline

SPX Daily Momentum Chart
Larger Image

  • In spite of a potential breakdown volatility remains subdued. VXX is below all the major moving averages and on Wednesday it established a new all time low. It is odd. Maybe VXX is carving out a Falling Wedge

VXX Daily Chart
Larger Image

In the technical front: Breadth is worsening

  • NYSE Summation Index has a sell signal in force and it is rapidly rolling down. On Friday it has breached the April higher low and the 50 dma. The next buying signal should occur once the RSI drops inside the oversold zone; hence more weakness should be expected in the weeks ahead.

NYSE Summation Index Daily Chart
Larger Image

  • The % of SP 500 Stocks Above the 50 dma is falling rapidly but with still room to the down side before entering the oversold zone

S&P 500 Stocks Above 50dma Chart

  • The McClellan Oscillator is negative and approaching the oversold line. A drop towards 90 ish could result in a tradable bottom

NYSE McClellan Oscillator daily Chart

 

Back to homepage

Leave a comment

Leave a comment