• 4 hours Saudi Arabia's Richest Are Being Forced To Buy Aramco
  • 1 day Silver Steadies Following Wild Week In Precious Metals Markets
  • 2 days Gold On The Rise After Fed Rate Cut
  • 2 days $5 Million Gold Toilet Vanishes
  • 2 days Oil Trader Loses $320 Million On Derivative Bets
  • 3 days S&P 500 Officially In An Earnings Recession
  • 3 days Miners Are Weathering The Trade War Storm
  • 3 days UK Credit Card Interest Rates Are Skyrocketing
  • 4 days From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 4 days Are Smart TVs Spying On Us?
  • 4 days Is Fossil Fuel Divestment A Waste Of Time?
  • 5 days A Russian Billionaire’s Space Quest To Save Humanity
  • 5 days Markets Take Breather As Consolidation Continues
  • 5 days Economic Woes Weigh On Copper Prices
  • 5 days World's Largest IPO At Risk Following Drone Strikes
  • 6 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 6 days What’s Behind The Silver Sell-Off?
  • 6 days The Retail Apocalypse Is Accelerating
  • 6 days The Top Tech Stocks Of The Year
  • 7 days America’s Workforce Elderly Workforce To Double By 2028
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…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

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