Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

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