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Trading Lessons

Stock Market SPX Bounce

Stock-Markets / Stock Markets 2016 Mar 09, 2016 - 02:38 PM GMT

By: Anthony_Cherniawski

Stock-Markets

The impulsive decline in SPX appears to be in need of a correction this morning. Currently the Premarket is higher, but beneath the 38.2% retracement level at 1989.54. We may see a further probe higher after the open to either the 50% retracement level at 1993.28 or the 61.8% retracement level at 1997.02. The retracement may go back to touch the lower trendline of the Bearish Pennant near 2001.00 – 2002.00, but that would be the extreme.


ZeroHedge remarks, “After yesterday's last hour selloff sent the S&P to the very edge of the critical support trendline which, as shown yesterday, meant 1980 had to be defended at all costs...

... so far the support has held, and in overnight trading European stocks have managed to rebound on the back of more levitation in oil, while US equity futures have ignored a drop in the USDJPY which touched 112.20 in morning trading, and have jumped by 0.5% as of this moment, up 10 points to 1,990.”

I agree that crossing 1980 may be a good confirmation of the change in trend and a good shorting point for those who want confirmation. At the same time, an aggressive trader may attempt to find the top to layer in a short positon.

VIX tested its daily mid-Cycle resistance at 18.93 yesterday in an impulsive wave as well. It has a pullback target of 17.00 which may give the VIX a good launch into the next wave beyond resistance. There is a likelihood of an overshoot, but I am simply attempting to give a reasonable wntry level with a minimal downside risk for those entering long the VIX or its ETFs.

TNX has made a 66.7% retracement of yesterday’s decline, but has not filled the gap. Should it attempt to do this, it would have to rally above 19.02.

Crude appears to have made an impulse off its top and may be retracing some of its decline. The high in this morning’s futures was 37.18 (near 50% retracement) and it appears to be drifting lower. There may still be a final probe higher. The 61.8% retracement level is 37.50 which may provide a good entry level for shorts. Today is the Primary Pivot for crude, which means the period of strength may be over.

The inverse relationship between the USD and WTIC may be broken this week.

USD closed above mid-Cycle support at 97.17 yesterday, allowing it to retrace to a higher level. This morning’s high so far was 97.54. USD appears to be pulling back but may probe higher with Intermediate-term resistance at 97.70 being a possible stopping point.

Once the retracement is over, the USD target for Wave 3 is 93.93, just beneath Cycle Bottom support at 94.11. The Wave 3 low in USD appears to be near March 25-29.

Regards,

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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