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
How to Protect Your Site from Bots & Spam? - 20th Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 20th Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 20th Aug 19
The Gold Rush of 2019 - 20th Aug 19
How to Play Interest Rates in US Real Estate - 20th Aug 19
Stocks Likely to Breakout Instead of Gold - 20th Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 20th Aug 19
Holiday Nightmares - Your Caravan is Missing! - 20th 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
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
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Can Stock Market See an Encore Performance to Q1?

Stock-Markets / Stock Markets 2019 Apr 01, 2019 - 03:00 PM GMT

By: Mike_Paulenoff


After performance results for the record books in the first quarter of 2019, the stock market is entering a very challenging period in April.

To be sure, the success and presumed benefit from a US-China Trade Deal remains a big economic and geopolitical carrot stick for the markets in the days ahead. How much of the anticipated trade deal dividend already has been discounted by the impressive Q1 gains is anyone’s guess at this point. Certainly, both the adjustment of the Fed’s interest rate trajectory and the prospect of renewed growth once the trade dispute is resolved combined to support the market during Q1.

In addition to progress of, or even a possible resolution to, the China trade issues, this coming week we get economic data on Retail Sales, the Purchasing Managers Index, ISM Manufacturing and Non-Manufacturing, Business Inventories, Durable Goods Orders, Auto Sales, Mortgage Applications, Jobless Claims, and on Friday morning, the Employment Report for March!

Among other vibes transmitted by the data, equity and bond traders might derive sufficient information to support or question Fed Chair Powell’s acute reversal in his U-turn on interest rates during January. Fed Heads Bostic and Kashkari give speeches on Wednesday, Mester and Williams on Thursday, just ahead of Friday’s Employment Report.

Starting April 1, 78% of the S&P 500 will be in a “black-out” period, followed by 86% on April 8th, when companies typically refrain from purchasing their company shares. By definition, the black-out period will remove a constant and consequential demand factor from the market sitting some 22% above its December lows.

Looking further ahead to the following week (beginning April 8th), earnings season begins, which could be fraught with uncertainty given The Street’s lowered growth expectations and concern about forward guidance after a rip-roaring, Fed-induced market performance during the first three months of the year.

Technical Challenges

From a technical perspective, the S&P 500 (SPX) has some challenges ahead as well. Last Friday Mar 29, after 13 trading days levitating above 2800, the SPX ended the week for the first time above the Fibonacci 76.4% retracement zone (2803.50 to 2832.00) of the entire September-December decline. See chart below.

Friday’s close at 2834.40—above 2832.00-- needs to be sustained to trigger a Fibonacci “breakout” that points to the next higher Fibonacci target after the September-December decline: a total recovery of the downmove from 2940.91 to 2346.58. That said, my next nearest term target is in the vicinity of 2880.

During mid-March, when SPX was trading above the 76.4% retracement zone, SPX climbed to 2866.00, but was unable to sustain price levels above 2832.00. We are about to find out if SPX bulls can leave the 76.4% retracement zone in the rear-view mirror in the upcoming days.

As for my ongoing Fibonacci Time considerations, April 1st, ( 3 trading days) represents the period when the recovery rally equals the length of time spent during the 2018 correction, and as such is a time zone during which SPX could put in a peak and reversal. From Monday through Wednesday (April 1-3), I will be watching for indications of upside exhaustion.

Two other technical aspects of the market are potentially bothersome to me as we approach a new week of trading. One is highlighted my Ratio Chart of SPY compared with UVXY (the ETF of the futures derivative of the VIX), which shows the relative strength or weakness of SPY versus UVXY. Since mid-2017, broadly speaking, when the ratio reaches or exceeds 6.40, it is in rarified air, vulnerable to a directional reversal that implies SPY weakness in relation to UVXY strength. As of last Friday, SPY/UVXY recorded a 7.26 close, which is in the Zone of Vulnerability, ripe for a reversal.

The other technical warning is highlighted in my SPY Chart of Unfilled Gaps. There are 6 Unfilled Gaps since the Dec 26 low. Five of the gaps were left behind after higher opens from the Dec 27 low, while just one gap was left behind on the downside after a lower open.

The unfilled down-gap was left behind on the open of Mar 22, from 284.67 to 283.80. As of Friday’s close, SPY was just 0.7% from filling that gap, but the unfilled gaps left behind on the downside are ominous, indeed, and at some point will be filled. From the perspective of the SPY chart structure, and the overwhelming propensity of markets to fill all open gaps, this chart is a cautionary tale.

Certainly, none of the three charts shown here preclude the S&P 500 from upside continuation, but they do suggest that adding long exposure “up here” is getting increasingly dangerous and frothy.

See Mike's annotated SPX & SPY charts as noted in the article.

Mike Paulenoff is a veteran technical strategist and financial author, and host of, 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, 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 - 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