Monday, November 28, 2016

SPX S&P 500 Daily Chart; Fibonacci Retracements

The three-week Trump Rally sends major stock indexes to new all-time record highs on Friday, 11/25/16. This morning, Monday, 11/28/16, about 90 minutes before the regular US trading session opens, S&P futures are down 6 points. Perhaps the euphoric rally has ran its course, as the put/call ratios and NYMO hint, or, the move lower may be a minor pull back in the trek higher. The put/calls and NYMO indicate that a pull back to one or more Fibonacci retracements is more in play than a minor few-point pull back. Price,however, may jog early this week (such as down Monday up Tuesday then down Wednesday); you are never sure of a near-term top until it is actually proven in the rear-view mirror.

For the huge rally from 11/7/16, a day before the presidential election, to present, 11/28/16, the SPX (S&P 500) rallies from 2088 to 2213 a huge 125-point leap, +6%. Shorts are running for their lives. If the 2213 is the near-term market top, the first Fibonacci retracement level at a 38% retracement is 2163. The 50% Fib retracement is 2148 and the 62% Fib is 2133.

The 20-day MA is 2156 and rising sharply as would be expected since it quickly responds to price being only a 20-day moving average. The 100-day MA is at 2159 floating higher. Group this with the 38% Fib and the important support/resistance levels listed on the weekend in a previous post, a landing zone at 2160-2164 is in play with 2164 very strong support.

As the previous S/R information exhibits, if price retreats, it will test and/or fall through 2205, then 2194, 2190, 2182-2183, 2175, 2169 and then test the 2160-2164. Price can bounce from any of these S/R levels. The 50-day MA is at 2152 moving flatish with a slight upward bias so this joins with the 50% Fib and S/R numbers to create a landing zone at 2146-2152.

The 150-day MA at 2132 teams up with the 62% Fib creating a potential price landing zone in the 2131-2133 range which is very strong and critical support for the broad stock market. Note how the Fibonacci lines line up with the price action during the rally higher from 11/7 thru 11/15. This does not display as typical behavior for the Fibonacci retracements and since it does appear it adds credibility to the Fib numbers and landing zones mentioned.

Start the week by watching SPX 2205, if that holds, the bears got nothing. If 2205 fails, the SPX will target 2194. Bears need higher volatility. Keybot the Quant, Keystone's proprietary trading algorithm, remains long and is currently tracking VIX 13.85 as a key market direction metric. Market bulls win if VIX remains under 13.85. Bears win if the VIX moves above 13.85. The VIX is trading right now at 13.26. If the stock market sells off but the VIX remains below 13.85, stocks will recover intraday and rally. The market selling will be sustainable if VIX moves above 13.85. 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.

Note Added 10:55 AM EST: The SPX LOD is 2205 and holding. The VIX is 13.11 well under the 13.85 targeted by the quant. Bulls are not concerned about the selling in the stock market since volatility remains low. Here comes the SPX down to 2205 for another test..... bounce or die.....VIX 13.25....

Note Added 2:44 PM EST: The SPX bounces and the VIX falls under 13 to 12.86 the bulls are not permitting any significant weakness to enter the markets. Here comes the SPX down for another test of the 2205 support. VIX is 12.87 so the bears do not have strength.

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