Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Potentially Powerful Stock Market Headwinds

Stock-Markets / Stock Markets 2019 Mar 25, 2019 - 10:41 AM GMT

By: Mike_Paulenoff

Stock-Markets

For the past four Sundays, my technical work has been focused on the extent of the post-Christmas recovery rally in the S&P 500 (SPX) in relation to the Sep-Dec 2018 correction from the Sep 21 all-time high at 2940.91 to the Dec 26 low at 2346.58.

Since mid-Feb, when the SPX climbed and sustained above the 62% Fibonacci retracement zone at 2713.70 (+1% target overshoot at 2740.84), I have been refocused on the next higher 76.4% Fib resistance level at 2803.50 (+1% target overshoot at 2832). Purely from a Fibonacci perspective, the 2803.50 to 2832 zone on the SPX represented the next natural resistance zone from where the recovery rally might exhaust itself.


In each of last week's first four sessions from Monday through Thursday, the SPX closed above 2832, with the highest close registering 2854.88 on Thursday—just hours after a much more dovish than expected FOMC policy statement. However, on Friday, the SPX gapped down and proceeded to close the day and the week at 2800.71, a full 1% beneath the upper boundary of the 76.4% Fibonacci recovery resistance ZONE, as well as below 2803.50, the actual 76.4% recovery coordinate of the entire Sep-Dec correction.

Apart from whether or not Friday’s weakness was precipitated by growing fears of recession triggered by an increasingly dovish Powell Fed, a plunge in longer-term Treasury yield, angst about the implications of an inverted Yield Curve, or perhaps anticipation of a weekend release of the Mueller Report, the 76.4% the Fibonacci resistance zone remains intact as we start a new week of trading -- albeit after an upside overshoot of 2% (2803.50 to 2860.31).

Furthermore, I would be remiss if I did not mention that Friday’s downside reversal came within two sessions of the Spring Equinox, exactly 6 months after all-time new highs were established on the day after the Fall Equinox (Sep 21, 2018).

The confluence and influence of seasonal change, an important Fibonacci technical level, overbought sentiment readings, and the negative reaction to the latest Fed policy pronouncements combine to exert potentially powerful headwinds against the near-term continuation of the 3-month 22% SPX advance.

That said, those headwinds were being challenged right out of the blocks at Sunday night's futures reopen. According to Attorney General William Barr, the Mueller Report has found no evidence of Trump campaign collusion with Russia, and leaves to AG Barr the determination of whether the President obstructed justice. Mueller’s report does not conclude that the President committed a crime, but it also does not exonerate him.

On its face, the lack of a crime is good news for POTUS, and likely will be considered as such by the algo programs on Sunday’s reopen of e-Mini Equity Futures. Initially, shorts will have reason to cover, and bulls will have reason to enter new long positions.

However, after the initial algo knee-jerk reaction, we will have to see if gains are sustained in relation to last week’s highs and the 76.4% Fibonacci resistance zone. If last week’s highs remain intact, or sellers emerge after the initial knee-jerk upside reaction to the Mueller Report, then perhaps traders and investors are becoming increasingly concerned by the divergent fundamental message of the bond market -- precipitously falling yields in anticipation of much weaker-than-expected U.S. and global economic growth.

For our purposes heading into Monday's trading session, all eyes should be on Friday’s high of 2866 in the ES (June e-Mini Futures) -- and Thursday's high of 2860.31 in the SPX -- with key support at 2800, the rising trendline off the Dec 26 low.

See Mike's annotated charts on the SPX and ES.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

Sign Up for a Free 15-Day Trial to Mike's Live Trading Room!

© 2002-2019 MPTrader.com, an AdviceTrade publication.  All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from MPTrader is prohibited. See our disclaimer.

Mike Paulenoff Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules