SPX S&P 500 Daily Chart; Fibonacci Retracements; Death Cross; Bear Market Continues; Battle at the 50-Day MA S/R at 3920

The bears keep drumming up doom and gloom but the bulls have managed a rally over the last 3 weeks regaining the 50-day MA at 3920. Price will likely want to back kiss the 50.

The SPX bumped around the bottom for a few weeks with the W pattern bottom a bullish development. You can also see that the price action has an inverted H&S vibe to it and from mid-June forward you can see a C&H from which price just broke above the rim at 3915-ish. The 50-day MA is 3919-3920 so these two form a confluence, a magnet, for price to potentially retreat to 3915-3920 for back tests of the 50 and C&H breakout.

The death cross (black circle) ushered in negativity. Remember, when a death cross occurs, price typically rallies. If price rallies strongly and nullifies the death cross, all is well for bulls. If the rally occurs, and price rolls back over to the downside, and the death cross remains in play, that spells trouble. In March, the death cross occurs, and voila, the rally occurs when the death cross occurs. Price rises and then dies from the end of March forward and the whole time the 50-day MA remains below the 200-day MA, thus, bad news ahead. The SPX then collapses to below 3700 in June.

The pink 150-day MA at 4284 continues to slope down, negatively, so this metric states that the cyclical (weeks and months) bear market in US stocks continues. The bear market in stocks is not over until you see the 150 flatten and then start moving higher again.

Two Fibonacci retracement charts are shown above. One for the all-time record high in the SPX above 4800 to begin the year, and the other for the peak in late March. It should be expected that price should at least retrace back to the 38% level (Fibonacci discovered that the 38% and 62% patterns are repeated throughout nature in flower petals, snowflakes, sea shells, many things).

The Fib retracements line up with important price support and resistance levels which creates credibility. The 38% Fib retracements are at 4030 and 4101 so that can be used as a target range for price (the S&P 500 retraces 38% of the total down move). 

Thus, mixing the C&H, Fib retracements and 50-day MA S/R together, and sprinkling some magical dust on top, the SPX may want to back kiss the 50-day MA at 3920 and then venture higher into the 4030-4101 range perhaps ringing the Fibonacci bell at 41 hundo. Price is at 3951 on Wednesday afternoon about 2 PM EST. 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.