Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
The Inflation Mega-trend and UK House Prices - Housing Market Analysis Trend Forecast 2022 to 2025 - 5th July 22
Gold Price Summer Seasonal Doldrums - 5th July 22
Tame Budgies Having Fun on a Grape Vine - UK Parakeet Easy Training - 5th July 22
Is the US Yield Curve Inversion Broken? - 3rd July 22
New Signs Economic Turmoil Will Prompt Fed to Lose Its Nerve - 3rd July 22
Stagflation With Powell Could Make Gold Price Happy - 3rd July 22
UK Housing Market Analysis, Trend Forecast 2022 to 2025 - Part 2 - 30th June 22
Stock Market Turning the Screws - 30th June 22
How to Ignore Stocks (and why you should) - 30th June 22
Top Tips For Getting The Correct Insurance Option For Your Needs - 30th June 22
Central Banks Plan To Buy More Gold In 2022 - 30th June 22
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Fib Resistance Warning to Err on Side of Caution

Stock-Markets / Stock Markets 2019 Feb 04, 2019 - 08:17 AM GMT

By: Mike_Paulenoff

Stock-Markets

The S&P 500 (SPX) is right at a price zone pointing more towards a meaningful give-back in the short-term.

This zone of resistance can be viewed through the Fibonacci price and time relationships on the daily SPX chart.

As the chart shows, as of Friday's close, the SPX resided approximately 16% above its late December lows, amounting to an exact 62% Fibonacci recovery of the entire prior decline from the Sep 21 all-time-high at 2940.91 to the Dec 26 low at 2346.58.


In addition, last Thursday Jan 31, the SPX made its closing recovery rally high at 2704.10, which represented the (Fibonacci) 89th trading day since the establishment of the Sep 21 all-time high; and

Finally, Jan 31 also represented the day when the recovery rally period from Dec 26 to Jan 31 equaled a Fibonacci 38% of the duration of the Sep- Dec decline period.

Purely from a technical perspective, unless Fibonacci recovery time and price converging around 2715 are purely coincidental, my sense is that SPX is circling a critical and consequential price zone that EITHER will conclude the post-December recovery period ahead of some magnitude of correction OR represent a launchpad for upside acceleration and continuation quickly towards 2800-2820.

As I see current conditions, given the presence of the Fibonacci relationships, there is no gray area separating the two scenarios. It is significant correction versus sharp upside continuation.

From an alternative perspective, let’s look at the SPY Point & Figure chart set-up which shows that the action since mid-December can be viewed as a large, potentially explosive accumulation pattern that is testing important resistance at 271, or the equivalent of 2710 in the cash SPX. If SPY climbs to a new recovery high print at 271.50, it will "break out" of its big base formation, triggering upside potential that projects to targets of 281, 292, and 300!

Before everyone gets all bulled up, let’s notice that the SPY Point and Figure price action ended last week with a minor sell-off from 271 to 269.50 that initiated a down-column of Red O’s heading into Monday’s open. If SPY opens lower on Monday, and prints 269.00, the column of Red O’s will gain more downside traction towards testing 267 prior, the prior upside breakout zone that coincided with President Trump’s meeting with the high-level Chinese officials in the Oval Office last Thursday afternoon.

At the moment, the confluence of the Fibonacci price and time relationships shown on the cash SPX chart, heavy resistance at the neckline 271.00-271.50 zone on the SPY Point and Figure chart, and four weeks of extremely supportive and influential market catalysts (intervention by the Fed, promising China trade updates, and a strong January Jobs Report), suggest strongly to me that a pause in, if not a meaningful give-back of the advance approaching in the upcoming hours.

This Tuesday evening’s (9 PM ET) State of the Union address from President Trump is setting up to be another influential extraneous price catalyst for the equity markets that has potential to trigger the next directional algo-spike in one direction or other. That said, Fibonacci resistance is warning traders to err on the side of caution.

See charts on SPX & SPY noted in this article.

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