SPX S&P 500 Daily Chart; Fibonacci Retracements; Bulls and Bears Battle at the 50% Fib

The SPX crashed from the all-time record high at 3394 on 2/19/20 to 2191 on 3/23/20 losing -35.4% in 23 trading days the fastest stock market crash in history. The SPX pops from 2191 to 2819 on 4/9/20 in 13 days a +28.9% recovery rally retracing 50% of the crash move, from a Fibonacci retracement perspective. Thus, price is at this 50% Fib pivot level at 2793 deciding to bounce or die.

Stock market bulls win above SPX 2793 while the bears win below 2793. At the current 2775 price, the S&P 500 benchmark index, which is the US stock market, is down 619 points off the all-time high a -18% deficit. Thus, if you are a long-only investor viewing your stock portfolio as your nest egg, your egg cracked -30% to -40% and even with the recovery over the last three weeks, your stocks remain fried by -20% or more.

The recovery rally is Fed-driven as all the rallies have been for 11 years; ever since former Federal Reserve Chairman Bernanke announced QE1 in March 2009. So stocks pop wildly higher with the shorts running for the exits which further fuels the upside. The rally is only driven by megacaps. AMZN and NFLX pop because everyone and his brother is in companies that benefit from Americans laying around at home due to the coronavirus. Small caps lag as do most stocks. Trading volume is not impressive.

If you are a novice technical analyst, you do not need the fancy charting tools to calculate the Fibonacci retracements. Price targets the 38%, 50% and 62% Fibonacci retracement levels during a rebound (or during a crash after a long upswing). Italian mathematician Fibonacci explained centuries ago that things in nature, such as flower petals, pine cones and trees, follow the same sequence and pattern of numbers. Interestingly, price movements in securities typically follow this same pattern of numbers identifying key future resistance levels (if stocks are crashing after a long run-up, the Fib levels would identify key future support levels for price). The crash is from 3394 to 2191 that is a difference of 1203 points. 38% of 1203 is 457 adding this to 2191 is 2648. Applying 50% to the crash distance is 602 points which yields 2793. Applying the 62% retracement is 746 points (1203 x 0.62), the 62% Fib level is 2937. This is the math behind the fancy chart graphics.

Stocks are floundering the last few days and you only have to look at the Fibonacci retracements to figure out why. The bulls and bears are battling at the 50% Fib at 2793 as stated above; the bull-bear line in the sand.

If the bulls win and price moves higher above 2793, the 62% Fib retracement at 2934 will be the target with price first kissing that 50-day MA at 2882 along the way. The 200-day MA resistance is at 3013. If the bears win and price pivots below 2793, the SPX will likely fall back to the 38% Fib support level at 2651 and then seek the 20-day MA support at 2569. The table is set so watch the SPX 2793 pivot to see who wins.

Keybot the Quant is on the long side due to strength in the chips and retail stocks. Watch SOX 1610 as another line in the sand. Bears will put a hurt on the stock market if SOX falls below 1610. Bulls are fine and laugh in the bears faces if the SOX remains above 1610. The SOX is trading at 1641 so it looks like the bulls are not worried despite the red computer screens. LOD 1631. Watch to see if the dirty socks loses the 1631 level, taking out the lows, since that will signal trouble ahead. 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 2:37 AM EST on Thursday, 4/16/20: The SPX tanks 63 points, -2.2%, to 2783 in the Wednesday session. The bears push the SPX back below the 50% Fib resistance, however, the chips remain well bid. SOX is at 1648 and the LOD at 1631 held. S&P futures were negative but now up +20 seven hours before the US opening bell for the regular Thursday session. Bears got nothing unless they send the semiconductors lower. On the SPX daily chart, price has violated the upper standard deviation band so the middle band at 2570, and rising, is on the table. Stochastics are overbot creating the initial spankdown in stocks yesterday on the daily basis. The MACD line remains long and strong in the daily time frame. Thus, the expectation would be that the S&P 500 needs to come up again for another matching or higher price high to provide time for the MACD to go neggie d which will place the near-term top in the daily time frame. The 50-day MA resistance is at the 2882 palindrome and moving lower. Price may come up to meet the downward moving 50 which may place the near-term top in a couple days or so forward in this daily time frame at 2800-2882. The new moon (darkest time of the month) peaks on Wednesday evening, which is also Earth Day, 4/22/20, so stocks may trade soft mid-week next week. S&P futures are now up +26 in the few minutes it took to post this message. The semiconductors are the main influence on stock market direction currently.