Last week ended bullish - above the 50 ma, bullish hammer on the weekly chart, still well below the daily upper Bollinger Band. I think this week should stretch upwards a bit more, hugging the purple channel on /ES and squeezing out shorts. I also think we're close to a turn downward, but last weeks failure to make any real bear tracks means (to me) that we've got a little more upside to go - possibly to the .618 or even the .658 around 2920 - 2970 on SP futures.
I've posted two possible scenarios - green (12345 up) and red (ABC down). SPY will have it's own analysis (related to this, of course) but I'll post that once I see how futures go tonight/tomorrow.
If we fall, how low? Well it's hard to say at the moment. As I've said, I don't see a larger crash just yet. I think the near term target is still 2635 area. If we crack below that - 2420 looks like strong support. Below that, we probably test the lows.
The last few days I've been looking at articles from April 1930 which near the end of the rebound for the 1929 crash. That rebound took approximately 6 months. I know the Fed/Government took quick action recently and things can go very differently from crash to crash. I don't expect a repeat of 1929. It's still interesting to read about what was happening at the end of the rebound of a major crash and see if there are any similar developments, both financially and psychologically.
As I read about this time in 1930 it is obvious that the economy seemed to be in much BETTER shape than now. I copied these quotes from from futurecasts.com/Depression_descent-beginning-'30.htm - very much worth a read. The whole site is well done if you are interested in market history.
"Total NYSE stocks reached just under $80 billion by April 10, 1930, making up about 73% of its losses since its September, 19, 1929 highs. The Big Board had surged about $30 billion in five months, a gain of about 65%. "
"Unemployment was reaching worrying levels. Where on average it only took mere weeks for the unemployed to find new work during 1929, it now took several months."
"There were great expectations of a quick business revival in the spring of 1930. Credit was ample and available at low rates. Bank rates had been cut sharply by the Federal Reserve Bank and all the major European national banks. Private interest rates had been cut even faster and sharper as people with money found it increasingly difficult to profitably employ it. Not only were business risks rising, the profit inducement to borrow was clearly declining, making the availability of money at sharply declining interest rates increasingly irrelevant."
"Business failures were up sharply - the most since 1922."
"This was the "spring rally" of 1930. The stock market remained determinedly over optimistic - bouncing back vigorously after each selling climax - rising in expectation of each possible trade turning point - and falling back only when disillusionment became inevitable."
If you've got anything to add, I'd love to hear it.
Good luck to all,
Sunship
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Oil coming down hard again overnight may help trigger a sell on the SP500 today, in which case the ABC (red) path may be playing out. I'll update at the end of the day. Good luck all
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At the end of the day SPY was rejected right before a gap - which could also be considered a "double top." Interesting close - in some ways a reverse of Friday in character. We'll see if we have any follow through to the downside overnight/tomorrow.
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Futures rallied over 2900 last night, still hugging purple trendline.
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SPY filled it's gap at open
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Two possibilities notated on SPY. Under 248.5 would help the near term bearish case (C down). Otherwise we may go up to the .618 fib at 293.25. Hard to tell with all the earnings/Fed news this week.
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Bearish close but nothing definitive. Some bullish div on 15 minute NQ chart as well, and with tech earnings, it gives me pause. If we close hourly below the blue trendline tonight/tomorrow on /ES it's a better signal for a sell. Have a good night.
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NQ trendlines to watch since tech is so important this week
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Blue trendlines on NQ will be key overnight/tomorrow
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/ES just hit the .618 fib and was rejected so far, Possible retest of purple trendline today.
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5 wave up idea on the main chart just about finished. Also bear divergences on 1 and 4 hour charts now. Today may be a reversal day, but keep in mind the FOMC announcement at 2pm and there will be most likely be wild swings in either direction. Good Luck
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.618 on Spy very close as well as channel trendline. It's possible they reject it before the .618 as so many people are watching that level. Just keep it in mind.
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SPY at the trendline and slightly over the .618 fib. Fed may help the bear case today but I still expect a spike up on the announcement even if we ultimately go down.
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So far so good, hopefully the Fed doesn't destroy the picture :)
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Powell press conference should start around 2:30
youtube.com/watch?v=S2TTcYVxP6E
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Rejected at red trendline - tomorrow needs to confirm any sell signal
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NQ rallied to the .786 fib and Neck of the head and shoulders pattern. Interesting to note, could go higher.
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Oil rallied to the channel but didn't break it, interesting as well (to me)
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Death cross on NQ today. 50 ma crossed below 200. I don't see anyone mention it? Could recross bullish easily, but I thought it was interesting
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Open will probably jump a bit, but we should start having our down wave today. I'm expecting something like this as of now, but the down wave should take us into next week at least
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Gapped under Blue trendline, a move like this would create a head and shoulders before more downside
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Just a quick update. No bounce overnight, so it may come today or next week. I'm watching a few new trendlines, just to see if there is any reactions when/if we come in contact with them. Otherwise, I'm short and holding over the weekend.
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NQ retested it's trendline, could be it for the bounce. I tend to expect a few tests before failure, we'll see how it goes.
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/ES finding support at yellow trendline bounce may start here in case anyone is daytrading
You have been killing it lately man. Thanks for the constant updates
valentinoamoro
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Thank you for the H&S update.
Yacker
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On the money with how the day has been going so far. Thanks for the analysis and updates.
legendofme
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Been really appreciating the charts, thorough analysis, and situational updates. Thanks!
UnknownUnicorn7260700
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The day we've been anticipating for over a month - the retest of the .618 fib line on SPY. Hold onto your butts...
valentinoamoro
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@Glockman357, lol. Same here.
twinkel-star
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Thanks for the great analysis.
UnknownUnicorn7260700
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@the_sunship thanks again for an awesome write up laying out the possibilities ahead for this crazy week. Despite Oil clearly struggling, won't the earnings of the big S&P Tech companies override any of that movement, pushing SPX even higher despite the disconnects?
the_sunship
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@Glockman357, Yes for sure Tech is more important than Oil. I'm only saying for today/tomorrow we may see a pullback on the index (if at all).
lauraanto21
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The complication this week is on the earnings and FED meeting. If earnings are very encouraging, I feel it can go 3000 just to squeeze out all the bears. If on the other hand something like NFLX reaction happens and Fed meeting not cutting rates to negative, possible sell the news. This is going to be an epic week. Market has to choose a direction