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SP500: Times Of Confusion and Turbulence

Dreadful week for the stock market.

Next week we have a major risk event with the FOMC on Wednesday. On Friday we have the Quarterly OPEX.

Monthly time frame:

  • Loss of the 10 mma = 2050
  • Lower low
  • The chart is now displaying a potential lower high with the November Spinning Top

S&P500 Monthly Chart
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Weekly time frame:

  • Ugly wide range candlestick
  • Loss of the 50 wma and 1o wma at 2062 ish
  • Loss of the 20 wma = 2029
  • Penetration of the mid November low
  • The next support is located at 1990 ish

S&P500 Weekly Chart
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  • Weekly RSI has breached the trend line from the September low

Weekly Momentum
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Daily time frame:

  • In spite of having lost all major moving averages which are now far off the current price the pattern from the November 3 high does not look impulsive hence SP 500 could still be involved in a retracement of the 3-wave up leg off the August low.
  • Price has penetrated the lower Bollinger Band increasing the odds of at least an oversold rebound
  • Applying the Fibonacci "rules" a correction can retrace the 0.618 of the previous up leg without jeopardizing the trend.
  • If the lower trend line of a speculative bullish flag does not hold the next support in located in the range 1994 (0.5 Retracement) - 1990 ish (Horizontal support)
  • If price is establishing at least a short-term bottom next Monday we need a reversal candlestick: Gap down and reversal or a Harami

S&P500 Daily Chart
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  • There is nothing to cheer in the daily oscillators chart. It is worrisome that the RSI is gaining traction away from the 50 line and the MACD has breached the zero line. The Stochastic and the RSI (5) have entered the oversold zone

Daily Momentum
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60 minute time frame:

  • The initial 3 wave decline (From the November 3 high) followed by another overlapping down leg should not jeopardize a continuation of the corrective rally from the August low
  • Again I have highlighted the range 0f the 0.5 - 0.618 retracement
  • Below the 0.618 retracement the pattern should be reassessed

S&P500 60-Minute Chart
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In the technical front Breadth Indicators are now oversold

  • The McClellan Oscillator is oversold

NYSE McClellan Oscillator Daily Chart

  • The 10 dma of the NYSE Advance-Decline Volume is oversold

NYSE Advance/Decline Volume

  • The high reading of the Equity Put/Call ratio (Contrarian indicator) should favour the long side

CBOE Options Equity Put/Call Ratio Daily Chart

  • A spike above 1.00 of the VIX:VXV ratio should increase the odds of a bottom

VIX:VXV Daily Chart


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