• 4 hours Contrarian Investors Are Beating The Stock Market
  • 7 hours Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 10 hours Amazon Faces European Union Anti-Trust Probe
  • 12 hours Commodities Are Having A Stellar Year
  • 1 day Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 1 day 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 1 day Tesla, Apple Claim China Is Stealing Intellectual Property
  • 1 day EV Giants Duke It Out For Battery Dominance
  • 2 days Tech Billionaire Takes Aim At Google
  • 2 days Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 2 days Expect A Pullback Before Gold's Next Major Rally
  • 2 days Why Interest On Gold Matters
  • 3 days Ten Extravagant Food Items For The Wealthy Only
  • 3 days Why Saudi Arabia Won't Give Up On The Aramco IPO
  • 4 days $32 Million Crypto Heist Halts Tokyo Exchange
  • 4 days Is A Gold Selloff Looming?
  • 5 days Central Banks Are Stashing Gold And Dumping Treasuries
  • 5 days Three Cannabis Trends Flying Under Investors’ Radars
  • 6 days $1.3 Billion In Cocaine Found On JPMorgan Vessel
  • 6 days Amazon Teams Up With Lady Gaga To Win Over Generation Z
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

SPX: The Consolidation Could be Over

  • It has been an impressive bullish week.
  • Odds should favor the end of the consolidation phase and the resumption of the uptrend.
  • For the short-term time frame Friday's reversal should lead to further corrective action next week.

Weekly time frame:

  • Weekly Oscillators remain a concern. We have an observable improvement as the RSI has bounced off the 50 line reaching the trend line resistance from the December high. Stochastic and MACD remain with a bearish cross.

SPX Weekly Momentum Chart
Larger Image

  • We do have a Weekly bullish Outside candlestick that has engulfed the previous 4 weeks price action. This has allowed to reclaim the 20 w, 5 w and the 10 w moving averages and the breakage of the trend line resistance in force since the December high. The Outside candlestick is suggesting an end of the consolidation phase (Pending confirmation)
  • Barring a still possible Triangle, a pullback in the range 2046-2033 should give an appealing Risk/Reward long setup.

SPX Weekly Zoom Chart
Larger Image

  • It is possible that SPX is forming a large Rising Wedge. If this ending pattern pans out it would open the door to a multi month/year retracement of the rally from the 2009 low.

SPX Weekly Wedge Chart
Larger Image

The lack of impulsive downside price action and breadth are the major arguments that favor a pending end of the consolidation phase.

  • NYSE Summation Index has a bullish cross and the RSI has not entered yet the overbought zone

NYSE Summation Index Chart

  • Weekly Stochastic (5,3,3) has a bullish cross with plenty of room to the upside before crossing the overbought line

NYSE Summation Index Chart

  • Cumulative Tick is clearly bullish

Tick Chart

Daily time frame:

  • In my opinion from the December high price should have completed a continuation pattern with a Zig Zag. If this is the case a potential pullback should bottom in the range 2044-2031 (50 dma - 20 dma). If the 20 dma does not hold then probably we should reconsider the Triangle scenario

SPX D-Flat Chart
Larger Image

If the scenario of a short-term pause is correct next Monday we should see the NYSE TRIN rise above 1, while the bottom of the assumed pullback should be established with a spike above 2

TRIN Chart

Also an increase of CPCE above 0.75 should provide a setup for a long entry

CBOE Options Equity Put/Call ratio Chart


Back to homepage

Leave a comment

Leave a comment