The S&P 500(SPX) closed today at $2,820 for a -$50.12(-1.75%) loss. Price is coming off of a second test and rejection from the 61.8% Fibonacci retracement level which has created a potential double top pattern at that critical Fib level. Price managed to hold above the 50% Fibonacci level on today’s selloff which is the midpoint of the total Fibonacci range from the February high to the selloff low made in March. In general, price trending above the 50% Fib level is considered bullish, while trending below the 50% is considered bearish. In order to be considered in a healthy uptrend price would need to be trading above the 61.8% Fib level. The level to watch going into the end of the week is the 50% Fib and whether or not price can hold above it. Today’s price candle closed gray which indicates a loss of upward price momentum with my candle color algorithm.
We still have a broken rising wedge pattern in the chart as well and a lower price target that price could still potentially reach. For a breakdown of how this target was calculated refer to this post here:
The Relative Strength Index(RSI) shows the green RSI line crossing below the purple signal line which indicates a loss of upward momentum in the short-term. The green RSI line is also close to crossing below the 50 level which is the midpoint of the total RSI range. In general, an RSI reading above the 50 level indicates overall bullish momentum behind price while a reading below 50 indicates overall bearish momentum behind price.
The Price Percent Oscillator(PPO) shows the green PPO line crossing below the purple signal line which indicates a loss in upward momentum in the short-term. Both lines remain above the 0 level though which indicates that price still has bullish momentum in the intermediate-term. A PPO reading above 0 indicates intermediate-term bullish momentum while a reading below 0 indicates intermediate-term bearish momentum.
The Average Directional Movement Indicator(ADX) show the purple directional line crossing above the green directional line which indicates a bearish trend, or direction, in price is forming. The histogram in the background represents trend/direction strength and for now remains weak. For the dominant trend to have strength the histogram bars need to be rising, and since we have the purple line above the green line indicating a bearish trend, and a low histogram reading, the current shift to a bearish trend is weak for now.
Volume spiked to a 9-day high on today’s selloff which indicates more traders entered the market to sell today than seen on any single day over the past 9. Going forward we need to pay attention to volume on potential any selloff continuation as rising volume during a decline would be a bearish indication.
Overall price remains neutral here, but is forming a bearish bias with the double top at the 61.8% Fib level and lower indicators that are hinting at short-term bearish trend/momentum forming. The short-term support level that needs to hold is the 50% Fib retracement level which is right near where the stop-loss level is for long trades. Should price move below the stop-loss level the shift from a bullish trend to bearish trend will increase thus putting the lower target near $2,423 in play going forward.
Today’s decline seemed to be influenced by a statement from Federal Reserve Chairman in regard to the Fed not looking at taking the Federal Funding Rate into negative territory, which many traders are expecting as a possibility going forward this year. Chairman Jerome Powell also expressed concerns about the economic recovery and basically said that we are not out of the woods yet and that more headwinds lay ahead for markets:
There were also a few bearish articles released today from some of the titan traders on Wall Street, such as Stanley Druckenmiller and David Tepper, who stated that markets remain overvalued and look similar to the dot-com bust.
We still have a broken rising wedge pattern in the chart as well and a lower price target that price could still potentially reach. For a breakdown of how this target was calculated refer to this post here:
The Relative Strength Index(RSI) shows the green RSI line crossing below the purple signal line which indicates a loss of upward momentum in the short-term. The green RSI line is also close to crossing below the 50 level which is the midpoint of the total RSI range. In general, an RSI reading above the 50 level indicates overall bullish momentum behind price while a reading below 50 indicates overall bearish momentum behind price.
The Price Percent Oscillator(PPO) shows the green PPO line crossing below the purple signal line which indicates a loss in upward momentum in the short-term. Both lines remain above the 0 level though which indicates that price still has bullish momentum in the intermediate-term. A PPO reading above 0 indicates intermediate-term bullish momentum while a reading below 0 indicates intermediate-term bearish momentum.
The Average Directional Movement Indicator(ADX) show the purple directional line crossing above the green directional line which indicates a bearish trend, or direction, in price is forming. The histogram in the background represents trend/direction strength and for now remains weak. For the dominant trend to have strength the histogram bars need to be rising, and since we have the purple line above the green line indicating a bearish trend, and a low histogram reading, the current shift to a bearish trend is weak for now.
Volume spiked to a 9-day high on today’s selloff which indicates more traders entered the market to sell today than seen on any single day over the past 9. Going forward we need to pay attention to volume on potential any selloff continuation as rising volume during a decline would be a bearish indication.
Overall price remains neutral here, but is forming a bearish bias with the double top at the 61.8% Fib level and lower indicators that are hinting at short-term bearish trend/momentum forming. The short-term support level that needs to hold is the 50% Fib retracement level which is right near where the stop-loss level is for long trades. Should price move below the stop-loss level the shift from a bullish trend to bearish trend will increase thus putting the lower target near $2,423 in play going forward.
Today’s decline seemed to be influenced by a statement from Federal Reserve Chairman in regard to the Fed not looking at taking the Federal Funding Rate into negative territory, which many traders are expecting as a possibility going forward this year. Chairman Jerome Powell also expressed concerns about the economic recovery and basically said that we are not out of the woods yet and that more headwinds lay ahead for markets:
There were also a few bearish articles released today from some of the titan traders on Wall Street, such as Stanley Druckenmiller and David Tepper, who stated that markets remain overvalued and look similar to the dot-com bust.