ES/SPY Weekend Levels (Sep 19-23)

The S&P finished the week down 4.79% after trading in a 316-point range. The S&P registered one of the largest weekly drops since 2020 closing at 3890. Price flushed as low as 3853 on Friday but finished the day about 37 points off the low. The catalyst for the weekly drop was higher than expected CPI data on Tuesday. Next week the market will turn it’s attention to the FOMC rate decision on Wednesday. A 75 bp hike is expected and Powell’s comments afterward will be closely scrutinized. Below are some points I am considering.

• S&P coming off a 4.79% weekly drop
• Inflation continues to be key metric to watch
• FOMC Rate decision on Wednesday!!
• Bias remains bearish
• Price closed the week below the key 3900 level
• Price currently below the 9/21/55 emas
• Price now sitting just above the 618 Fib (3888)
• Possibility of a compound corrective move down to 3767 if the 618 Fib is broken
• Downside target is now the June 17th low (3639)
• Upside target and resistance is 21/55 emas around (4043)
• Last two weeks of Sept historically week period for stocks
• Monday has been the weakest day of the week
• VIX holding at 26 so far.

WEEKLY EVENTS

Monday Canadian PPI
Tuesday US Housing Starts, Canadian CPI
Wednesday US Existing Home Sales, US EIA Crude & FOMC Interest Rate Decision
Thursday US Jobless Claims
Friday Canadian Retail Sales, Powell Speaks & US Manufacturing PMI Flash

NOTABLE EARNINGS

Monday AZO
Tuesday SFIX, OPOG
Wednesday GIS, KBH, LEN, TCOM
Thursday CCL, DRI, FDS, COST, FDX
Friday Nothing Notable

BULLISH NOTES

Oversold conditions
Pinbar close on Friday
Potential positive reaction to FOMC
Put/Call points to net short = potential reversal
Potential bond yield reversal

BEARISH NOTES

Strong bearish momentum
June 17th low may be price magnet
Potential negative reaction to FOMC
Negative sentiment = self fulfilling prophecy syndrome
Price below neutral/ 9/21/55 emas
Bond yields continue to rise
Below ascending trendline
Below 3900.

Comment:

Like the Nasdaq the S&P has bullish harmonic in play. The completion zone is in the 3780 area.

Comment:

Recovery this morning from overnight lows. Watching 3900 level for a break. Would expect bullish continuation above that level. Potential for short covering going into FOMC

Comment:

Rallied back into the 3900 area into the close yesterday but ran into trendline resistance. Note the prior structure (green circles) and the 618 fib. Below the 618 more bearish. Above more bullish. Expect choppy price action going into FOMC.

Comment:

Price has continued to chop above and below the 3900 level going into the FOMC in a tighter range. The arrows above and below are target areas if price breaks out of the range. May not see a move until the announcement.

Comment:

Price broke the bottom of the box after another failed test of 3900. The lower target was hit at the 1.272 Fib extension. This is also the completion zone for the bullish harmonic. I will watch for a bounce out of this zone tomorrow. Very bearish price action so the June 17th low is definitely in play.

Comment:

Here is another look at the bullish harmonic. Completion at the 1.272/786fib. Stop is large on this just below the long term 382 Fib. At the target now and would expect at least a short term bounce. If price fails to react I would consider it to be very bearish.

Comment:

Same as Nas. Gapped below the harmonic completion. This is bearish. Break of the overnight low increases odds that we go down to June lows. Stop for harmonic is below the June low so the bounce zone is large. Potential for a big move in either direction this morning.