SP500: Update


SUMMARY


To quote myself from last week “I don’t see a quick conclusion coming from the current market”. Hmmm… Well that was a mistake! 

However we did see that vitial close beneath the 1260 for losses to take hold, and done with such force that the potential bullish symmetrical and and bullish hammer candle were quite literally obliterated on Monday after opening, despite opening with a promising gap-up. 

Monday’s trading saw the 200eMA get tested, but Tuesday rallied straight through this critical support as the markets witnessed the largest declines 2008. In fact losses were so rapid last week that we’re already close to reaching the minimum target from the head and shoulders pattern. 

Friday saw a critical 50% fib level tested but we closed the day just above it producing a long legged Doji. This is hardly a bullish  sign but represents the markets uncertaintly – personally I think the market is just catching its breath for another drop. 

So how long can we expect the bears to remain in control? 

The cycles are looking as bearish as ever but hinting a possible retracement. Weekly and Daily RSI have entered the oversold territory, so at best I anticipate a retracement before further losses and will continue to short any pullbacks. I don’t expect any gains to reach the 200eMA any time soon (if at all) but this will provide a solid resistance level, along with the previous swing low of 1260. 

If we can break through the fibonacci cluster my eyes will be set on the swing low of 1010.

CYCLES


22.1 Day
Centred  SMA
 
So it would appear the larger cycle has topped painting a bearish picture overall. 


MARKET BREADTH

McClellan
 Summation:
































I’ve been following the divergences between the large cap and mid-cap stocks US stocks since last year. The Russell 2000 is the most prominent.



0% (down from 40.49%)

 0% (down from 22.87%)

 0% (down from 7.89%)


SENTIMENT


1.23 (up from 1.0) – The highest level since March 2010


30 (Down from 69) – From just under overbought to just over overbought in 5 trading days

Closed at 32 but peak 39 on Friday making it the highest level since July 2010


TREND
Primary
 

SUPPORT & RESISTANCE


Fibonacci:















Resistance:









Support:


Fib cluster around 1100 – 1108 may provide support – of broken then I’ll look the swing low around 1010 (which is also near the 50% fib line)

1260: Weekly 50eMA 

1276: Daily 200eMA  

1255: Weekly Candle Marabuzo Line

1230: Daily Marabuzo Line




1188: Weekly 200eMA  

1170: Swing low 

1130: Pivot 

1100 to 1108: Fib Retracement  

1010: Swing Low 


PATTERNS
Reversal

















Weekly Candle:

Daily Candle:
















Using the distance between the head and neckline projects a minimum target of 1134.5.


Bearish Belthold

Long Legged Doji (Aka Rickshaw Man)
***

“Trade what you see, not what you think…”

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