Stock Market S&P 500 Technical Outlook

By: Submissions

Volkmar   “Marc”  G.  Hable. Technical  comment. 
 
This  is  an update  on the  technical  comment  regarding the  S&P500 (symbol:  SPX). 
1. An  ascending wedge has formed  in  the  past  months. This  represents  a  fairly reliable pattern  in  the  S&P500 as  well  as  the  German DAX   large cap index.  Other  indices  display  a  less  reliable reaction  to  that  pattern but may  follow  suite  to  those two  leading   stock indices. 

2. The   pattern typically  (but  NOT  always)  is  characterized  by  high  speed  corrections.  
3. The   first  target  zone  of  the  expected  correction is  the  area  highlighted  in  blue. This   is  major support and  should  trigger  a  multi‐ month rally  once  reached.  This  
assumption  of  course  is  subject  to  the  hoped  for  lack  of   any negative external factors. Shock reactions  in  the  market  to  unforeseen  events  can   drive markets 
usually  lower  than   any technical  targets  would indicate.  E.g. another Greece  type  crisis or   similar.  
4. Time: the  horizontal yellow  arrow  indicates  the  time  the  correction should  take  which  is   anything   between  23%  to  48%  of  the  time   it  took  to  complete  the  rally  
since the  low   in  July  2011. This  puts  the   anticipated  end  of  the  correction somewhen   into  the  end  of  June  to  mid‐September.    A  large range admittedly,  but 
looking   into  the  big crystal  ball is  a  bit difficult  at  this  point in  time  for two  reasons:  the  summer months are ahead  of  us  during  which trading  usually  slows down 
significantly   and   might drag  out this  correction.  On the  other hand  ascending wedge patterns typically   are  followed  by  very  rapid corrections.  Which one  is  it  
going to  be? 
5. A  pennant has  formed  (please  see  formation at  the  start  of  the  left  green  arrow).  An  a‐b ‐c  pattern looks almost  complete  and   should  be followed   by   further  
selling.  A  break below the  pennant  may be a  good  short opportunity  with  stops very  close by. Another technical  possibility is  the  test   of  the  highs of  the  wedge 
followed  by  a  decline. 
6. Shorts  would need quite some patience  and  good nerves  going  forward.  
7. FUNDAMENTAL FACTORS:   some fundamental  factors   may  influence  the  technical  expectations.  
a. It  is  election  year  and  traditionally  election years in  the   US have  been  up‐years with  quite  a positive stock market  outlook. 
b. By  consensus of  all  reasonable  people  we have  a  very  significant  inflationary  problem  in  the   leading  economies.  This  means more upside  for gold   and  
stocks.  
These fundamentals  represent  a  significant risk  to  all   investors  betting  on falling  share prices.  
8. CONCLUSION:  the  current  year   long  rally  looks  quite tired   and   is  coming  to   an  end.  Expect  a  corrective decline  into  the   target  zone  marked by  the  blue  rectangle, 
followed  by  a  rally  (later this  year)  above  recent  highs.  See the  green arrows   for a   first   indication.  I will comment  on commodities and  particular  gold   in  the  next  
couple  of  days  whenever I  have  time.  
9. DISCLAIMER:  all  the  usual disclaimers   apply, in  particular  do your  own  research  please  and  don’t rely  on me  for  investment  decisions.  I am using mathematical  FEM  methods not depicted  here  to  come to  certain  conclusions  and  while these work for me  most of  the  time  they  may not be suitable  for everyone. 

I will update  the  technical   pictures  as  necessary. Sincerely,  Marc 

Dr. Hable is a physicist and geoscientist by training and in addition holds a B.Sc. in Agriculture and Agronomics. In 2011 he has been appointed Consul for the Republic of Guinea.

From 1996 to the beginning of 2001, he was the CEO for the European operations of Adecco, a Swiss $20 billion dollar Fortune 500 Company where he managed its offices in Europe and some parts of Asia comprising of 6,000 employees. From 2001 to 2009 he was a fund manager and asset advisor for STG Ltd, a private Swiss 700 million Euro fund focusing on energy, commodities and resources; during this time Dr. Hable managed to achieve an annual average net return of 19.8% with no down year. In December 2011 the Swiss group awarded him with the Liftetime Fund Manager Award. Previously he held senior executive positions in the oil exploration industry with Western Geophysical, the Diplomatic Corps, and a global Engineering Consulting Company. He is fluent in English, Spanish, German and French. Professional focus areas include geology & mining engineering, particle & molecular physics, robotics.

If you would like to send me a message please use the contact form on www.samariumgroup.com

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