$SPX has clearly defined risk levels. Its facing a good test at its 161.8% fib extension from the 2016 lows. The rising bearish wedge should lead to a pullback which will find support at the 100% fib extension. I would use this as a buying opportunity.
the last time SPX futures gapped in a certain direction… my previous post talked about an impending correction, so this could be it.
Are giant robots/algos controlling the markets? The last 2 big -8% dips lasted almost exactly the same time periods of about 2 months, so will this time be different? Applying the same time ruler on the last 2 dips to an expected upcoming dip, we get 06 May 2013 as the week the market bottoms around 1420, which equates to about -8%. The weekly RSI is also overbought, same time as when the last 2 corrections began, & theres that long term rising RSI support from Sept 2011 still in play to support the idea of a 1420 support.
As mentioned previously, NDX has hit its HNS right shoulder target at 2783 & reversed down. Now looking for support below its 200DMA around 2650. If that doesn’t hold then lower support is 2550 on the rising multi year trendline.
SPX is showing a bearish shooting star on its monthly chart. First support is 1466, followed by 1415. Technically it looks setup to hit around 1415 before a much stronger reversal. Monthly chart isn’t overbought, so short term declines are expected.
Having said all that, short term $TRIN & $NYMO are showing oversold signs, so be prepared for strong daily reversals along the way down.
2% more till the right shoulder of the Naz, & if SPX follows suit, thats right on its 161.8% fib extension from Nov 2012 lows, & also a multi year high. A suitable place for the bear to appear it seems.
It seems the 100WMA is more important than the 50 or 200WMA for the SPX. Since 2010, the 100WMA has been a strong support line, therefore I would imagine the next decline to be no different. 1400 is line in the sand which also is 23.6% fib retracement of 2000 high (secular bear theory). Strong break/reversal from there is telling. RSI support trendline is also quite clear.
What if the US went “over the cliff”? Put it this way, neither side wants to be seen agreeing outright & giving in. Geithner has his bungee cord ready.
So let the charts do the talking: the SNP500 could be forming a mid term HNS, and right shoulder complete target is about 1300, which happens to be at about the converging 200WMA. This is would be a very negative result as it would be breaking the long term rising support formed since 2009. Many individual stocks are still setting up for more upside as seen with 63% of SNP500 stocks above their 50DMA, & peak is >80%, but their rallies could be derailed by what happens this year end.
Since 2009, the SNP500 has gained about 200% in value… is the world economy still dodgy?
Looking back from 1995, its multi-year triple top resistance is nearing, so will we push through the magical 1530? There’s a fair chance of a big consolidation before that happens, which will setup for the recovery push upwards. It seems to me this maybe the case due to the nature of rising wedges to break to the downside. I’m not expecting to go back to 800 again, but considering how much it has gained, a decline to close to its 200WMA at about 1250 is considerable.
Once again a stick save has prevented the SNP500 from violating the support line extending from 2009. This therefore can be deemed as a very important psychological trading level. If breakdown occurs below this trend line & doesn’t recover, it can be seen as very negative for overall risk assets. Permabulls will see this support as good time to go long again. To me its too early to tell if its all in time. Short term overhead resistance is 1375-1380 IMO. Disclosure: Im long Apple short term & looking to sell into strength.