S&P 500 Possibly setting up for an exceptional short opportunity over the next few weeks, possibly into October.
First, the technicals.... I added Fibonacci levels to the long term monthly chart using the 2009 low and aligned significant levels to highlight important historical levels on the chart.
0.618 = Double top from 2000 & 2007
0.382 = Intermediate resistance from 2014 to 2016
0.236 = The exact monthly close following the bounce from Dec 2018 lows
0.5 & 0.786 Also acted as support and resistance, but to a less significant degree than the examples above.
If we conclude that these fib levels are placed properly (which I have), it puts the top in and around 3060.
It's a little difficult to see on the monthly chart, but a trend-line connecting the tops from Jan 2018 to present would present a similar resistance level (near 3060). I will post a close-up of this trend line on a shorter time-frame chart in the comments. In my opinion, a sustained break above this trend line is quite unlikely. A test of this trend line would produce a new high, stopping out weak shorts with stops above the prior swing high, increase bulls complacency through enthusiasm of making a new high. Market has been rallying around Fed policy and the prediction of FOMC rate cut, scheduled September 18. After this there is little to base a sustained rally in the markets on.
The red triangles on the chart are all placed on the month of October and coincidentally (or not) show times when the market began a large selloff. October 1929 (Market crash of the Great Depression) could be added to this list.
Expect a retest of the 2018 lows sooner or later and if broken, there is a lot of room to move to the downside.
First, the technicals.... I added Fibonacci levels to the long term monthly chart using the 2009 low and aligned significant levels to highlight important historical levels on the chart.
0.618 = Double top from 2000 & 2007
0.382 = Intermediate resistance from 2014 to 2016
0.236 = The exact monthly close following the bounce from Dec 2018 lows
0.5 & 0.786 Also acted as support and resistance, but to a less significant degree than the examples above.
If we conclude that these fib levels are placed properly (which I have), it puts the top in and around 3060.
It's a little difficult to see on the monthly chart, but a trend-line connecting the tops from Jan 2018 to present would present a similar resistance level (near 3060). I will post a close-up of this trend line on a shorter time-frame chart in the comments. In my opinion, a sustained break above this trend line is quite unlikely. A test of this trend line would produce a new high, stopping out weak shorts with stops above the prior swing high, increase bulls complacency through enthusiasm of making a new high. Market has been rallying around Fed policy and the prediction of FOMC rate cut, scheduled September 18. After this there is little to base a sustained rally in the markets on.
The red triangles on the chart are all placed on the month of October and coincidentally (or not) show times when the market began a large selloff. October 1929 (Market crash of the Great Depression) could be added to this list.
Expect a retest of the 2018 lows sooner or later and if broken, there is a lot of room to move to the downside.
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Close up view on the weekly chart.
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S&P grinds higher within ascending channel. Do we have one last push up towards the weekly resistance trend-lines connecting prior tops in the market.
