• 13 hours Is This The World’s First Truly Democratic Stock Exchange?
  • 16 hours India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 19 hours First Quarter Profits Slip For World's Top Oil Companies
  • 21 hours The Yuan May Be China's Biggest Weakness
  • 2 days Hedge Funds Having A Banner Year
  • 2 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 2 days BHP Turns Bullish On EVs
  • 2 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 3 days The $90M Inflatable Rabbit Redefining Modern Art
  • 3 days Huawei’s Fate In The Air
  • 3 days Tesla Slashes Prices Again
  • 3 days The Modern History Of Financial Entropy
  • 4 days Italy’s Central Bank Embraces Sustainable Investing
  • 4 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 4 days Researchers Push To Limit Space Mining
  • 4 days Could China Start Dumping U.S. Treasury Bonds?
  • 5 days Is Winter Coming For HBO?
  • 5 days Rise Of EVs Signals Peak Gasoline
  • 6 days Jeff Bezos Doubles Down On Space Colonization Ambitions
  • 6 days Gold Mining Stocks Stuck In Limbo
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

TheWaveTrading

TheWaveTrading

TheWaveTrading

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on…

Contact Author

  1. Home
  2. Markets
  3. Other

SP500: Dead Cat Bounce

Monthly time frame:

  • The 10 mma has a negative slope
  • In addition we know have a lower high and a lower low

We should not rule out that SP 500 has begun a corrective phase that could open the door to a 0.382 retracement of the advance from the 2009 low which would coincide with a test of the Double Top break out (2000 and 2007 highs), I am talking about the range 1574-1553.

S&P500 Index Daily Chart
Larger Image

Weekly time frame:

  • Friday's intraday drop below the August low has negated the Triangle scenario
  • Going forward the Head and Shoulder could become the prevailing pattern. The measured target is located at 1611
  • On Friday the August low was temporarily breached but held by eod
  • Below the August low the next support is located at the October 2014 low at 1820. Then below we have the trend line from the 2009 low

S&P500 Index Weekly Chart
Larger Image

  • The decline from the May high is not impulsive (It brings to agreement of a corrective phase)
  • So far we have a Zig Zag in progress with Fibonacci extension targets for the wave (C) in the range 1776 - 1683
  • A Zig Zag can establish the end of a correction or it can morph into a Double Zig Zag / Triple Zig Zag

S&P500 Index Ending Diagonal Chart
Larger Image

Daily time frame:

  • The wave (C) is unfolding an impulsive decline
  • We should be close to the bottom of the wave (3)
  • Hence I expect a brief turnaround (Dead cat bounce). A wave (4) rebound with a potential target in the range 1950-1972
  • Once the wave (4) is in place one more down leg will conclude the Zig Zag from the May high.
  • We will have to reassess the pattern as a bottom or a large snap back rally will follow.

S&P500 Index Ending Daily Chart
Larger Image

Reasons to expect an oversold bounce:

  • Equity put/call Ratio has reached the upper Bollinger Band (Contrarian indicator)

CBOE Options Equity Put/Call ratio

  • The McClellan Oscillator is oversold and it is displaying a positive divergence

NYSE McClellan Oscilator Daily Chart

 

Back to homepage

Leave a comment

Leave a comment