Monday, March 17, 2014

SPX Daily Chart Fibonacci Retracements

Last week the SPX received the negative divergence spank down from 1884 to 1841. The chart is very negative but the S&P futures are catapulting over 10 points higher ahead of the opening bell a couple hours away. The red lines show negative divergence across all indicators, overbot money flow and stochastics, and the rising wedge that all conspired to create the knock down in price. The RSI, stochastics and money flow all lost the 50% level now in bear territory. The MACD lines perform a negative cross lighting the way ahead for bears (small red circle). Last Tuesday, the red candlestick shows a bearish engulfing pattern but on Wednesday the bulls fight back creating a hanging man. Thursday and Friday the markets collapsed lower and interestingly, there are no gaps left behind. Thus, considering the negative divergence was universal across all indicators, and there are no gaps above, there is really no reason for price to move higher again (despite the +10 S&P futures).

The blue lines show the Fibonacci retracements for the move from the 1660-ish October low to the 1884 high. The red lines show the Fib retracements for the rally from the 1740 February low to the 1884 high. The first Fib level is the red 38% retracement at 1828 which is very strong support and also the 50-day MA is 1828.84. This creates a strong confluence and a magnet area for price to make an important test. Note the Fib's lining up in agreement, the red 62% retracement and blue 38% retracement, and 100% red retracement and 62% blue Fib, which creates a stronger attraction for price at the 1794-1800 level and 1737-1742 level.

The chart is very weak so any bounce would be viewed as a dead-cat bounce at this juncture and then weaker prices would be anticipated moving forward. Price may back kiss the 20-day MA at 1854.24 which would be the target today if the S&P futures remain buoyant. Projection is for sideways to sideways lower moving forward. If the RSI, stochastics and money flow move back above 50%, price will take another ride higher above the 20-day MA for a potential M top pattern (double top), however, sideways to sideways lower is the current projection forward for equities. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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