American stock indexes were in negative territory at the end of November as Down Jones lost 3.73% and the S&P 500 broad market index weakened by 0.83%. This fall was mostly related to the last days of November, just after Thanksgiving Day in the United States when the new extremely contagious COVID-19 Omicron variant emerged.
The daily timeframe Dow Jones chart shows that the 35515-35260 points zone, where August highs were located, has acted as a support level recently. But on the second attempt to reach this level, there was a drop, and a gap was formed. The index is now moving towards a new support level at 33900, which was established at the end of March.
The S&P 500 has a different technical picture as it seems to be in a much better position than the Dow Jones index. However, there are some observations I want to share with you.
Firstly, there are divergences on the number of oscillators between November 5 and November 22 on the daily timeframe chart. Secondly, price movement since November 10 has been forming a reversal pattern “ascending wedge”. Such patterns frequently appear at the end of the upward trend, and downslide of the S&P 500 index below 4630.86 points. In this case, the beginning point of this ascending wedge may indicate its acceleration.
The nearest support level for the S&P 500 is located at 4540-4545 points, where the maximum level for September was recorded. If this support level is not sustained, then the next support level will be found at 4460-4480 points, or at the lower peaks of August and September.
It is noteworthy to mention that the S&P 500 rally ended below the support line of the trend which began in March 2020. This support is now acting as the only resistance for the index which is still close to its all-time highs.
Therefore, a negative November closing, together with the “Dark cloud cover” pattern on the Down Jones chart and the “falling star” pattern on the S&P 500 chart, increases risks of a downside continuation at the beginning of December.
Statistically speaking, the month of November is usually a positive month for U.S. stock indexes. Over the last 20 years the month of December has been a rather positive month with the indexes closing on the upside 60% of the time. Over the last two decades, at the end of December stock indexes have been positioned in negative territories 30% of the time, and only on two occasions did stocks close in neutral territory. So, we may have a good chance of ending this year on a positive side despite the negative start of December.
The year of the Metal Ox may be closing on new record highs as the Dow Jones has already gained 12.67% from the beginning of 2021 and the S&P 500 index has added 21.58% since the beginning of the year.
The dangers of the new COVID-19 Omicron variant seem to be overestimated by investors.As for the oil market, JPMorgan has said in its analysts’ notes that OPEC+ is likely to support crude prices in 2022, pushing it to $120 per barrel.
The daily timeframe Dow Jones chart shows that the 35515-35260 points zone, where August highs were located, has acted as a support level recently. But on the second attempt to reach this level, there was a drop, and a gap was formed. The index is now moving towards a new support level at 33900, which was established at the end of March.
The S&P 500 has a different technical picture as it seems to be in a much better position than the Dow Jones index. However, there are some observations I want to share with you.
Firstly, there are divergences on the number of oscillators between November 5 and November 22 on the daily timeframe chart. Secondly, price movement since November 10 has been forming a reversal pattern “ascending wedge”. Such patterns frequently appear at the end of the upward trend, and downslide of the S&P 500 index below 4630.86 points. In this case, the beginning point of this ascending wedge may indicate its acceleration.
The nearest support level for the S&P 500 is located at 4540-4545 points, where the maximum level for September was recorded. If this support level is not sustained, then the next support level will be found at 4460-4480 points, or at the lower peaks of August and September.
It is noteworthy to mention that the S&P 500 rally ended below the support line of the trend which began in March 2020. This support is now acting as the only resistance for the index which is still close to its all-time highs.
Therefore, a negative November closing, together with the “Dark cloud cover” pattern on the Down Jones chart and the “falling star” pattern on the S&P 500 chart, increases risks of a downside continuation at the beginning of December.
Statistically speaking, the month of November is usually a positive month for U.S. stock indexes. Over the last 20 years the month of December has been a rather positive month with the indexes closing on the upside 60% of the time. Over the last two decades, at the end of December stock indexes have been positioned in negative territories 30% of the time, and only on two occasions did stocks close in neutral territory. So, we may have a good chance of ending this year on a positive side despite the negative start of December.
The year of the Metal Ox may be closing on new record highs as the Dow Jones has already gained 12.67% from the beginning of 2021 and the S&P 500 index has added 21.58% since the beginning of the year.
The dangers of the new COVID-19 Omicron variant seem to be overestimated by investors.As for the oil market, JPMorgan has said in its analysts’ notes that OPEC+ is likely to support crude prices in 2022, pushing it to $120 per barrel.
