Here Are The Key Levels To Watch In The S&P 500
With all of the incessant market gyrations this year, most traders and investors are going into the end of the year extremely confused. The simple charts I’ve been watching and showing help to make sense of the noise and show a big picture point of view.
In October, the S&P 500 broke below its uptrend line that started in early-2016, which is an important and concerning technical breakdown. The S&P 500 is still holding above its 2,550 to 2,600 support zone that formed at the early-2018 lows. If this level is broken decisively, it would give another bearish confirmation signal.
The chart below shows the 2,550 to 2,600 support zone on the daily chart:
If the S&P 500 is unable to break below the 2,550 to 2,600 support zone in the short-term, it may stage a bounce or relief rally off that support. While such a rally would assuage the fears of many investors, it’s important to beware of the risk that it may be the right shoulder of a bearish head and shoulders pattern (I’m not predicting that it is or isn’t – I’m just saying to be mindful of that scenario).
I’m concerned about a serious bear market ahead because of the massive bubble that formed in the U.S. stock market – please watch my video presentation to learn more:
For now, I am watching if the S&P 500 can close decisively below the 2,550 to 2,600 support zone or if it stages a bounce off this level.
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Founding Executive Director Center for Innovation and Entrepreneurship | Professor of Innovation & Entrepreneurship I Co-Creator; STAR? Model for Innovation I VC Partner I Best Selling Author
6 年12-18-18; "the head" of the head and shoulder never really appeared today, it just looked up for a few minutes and then took cover again. Buying on the dip was a good idea, but this market is just too turbulent. Tomorrow will be exciting, even if the market has already priced the rate hike into equities. A Fed Dove makes the debt problem longer and more volatile, and a Fed Hawk makes the debt problem and equities markets more volatile. Choose your poison.
Co-Manager at a Stock Trading company
6 年What about correlation? This just popped up in my feed, so I am curious, and I also only have 1 - 2 years experience with trading so this is just a theory for now. What about the correlation of the strength of the currency this is based on. For example, if it was based on something like the JPY, would you have to analyze the JPY's strength over the course of a few days, months, years? Wouldn't that help you with insight as to what your position is going to be in future? If so then would that mean you could just trade on JPY's strength decreasing and increasing? By this I mean whenever the JPY's strength decreases would you place an opposing trade on the other end as markets would have to increase in price to stay level with the price decrease of JPY.... I don't know teach me someone.
Chief Investment Strategist
6 年Volatility will likely be much worse next year. It's a sign that liquidity is being withdrawn from the market.
Co-Manager at a Stock Trading company
6 年How about using a fib. Extension to predict the bounce after it has broken support?