This week's chart is all about balance. A few new indicators are shown and I'll comment about Federal Reserve Bank Normalization for July. The path to all time highs can use a breather to gather strength as indicated last week. The process seems underway after an up/down week for markets that ended in decline.
If you've followed along recently the wave 5 path to new highs is still underway and tracking nicely to the indicated path in Q4 2018 (blue 5 at October). This week I've added a "Stop and Reverse" indicator (Orange dots) that also highlights interim up/down trends. Note the indicator's interesting level at Friday 7/27 of exactly 2808.34. That was Friday's low and provided support to technically avoid reversal of trend (but I doubt it will hold, perhaps by Monday 7/30). Lastly, MACD indicator (bottom) has flattened and looks like it will probably crossover and head lower.
In summary, expectation is still an overall uptrend to new highs, but with near term weakness. A healthy pullback is estimated using several measures (Fibonacci retrace of different degrees, Elliott Wave Theory) with target range at 2750 (yellow line) for a reasonable balancing point. That level is just below the 50d sma for this lower degree movement, too (within wave 5).
Lastly, July 31st will allow for July's "normalization" to the Fed's Balance Sheet. It is also settlement date for part of last week's new issuance by Treasury. Those combined events may impact markets on Tuesday.
If you've followed along recently the wave 5 path to new highs is still underway and tracking nicely to the indicated path in Q4 2018 (blue 5 at October). This week I've added a "Stop and Reverse" indicator (Orange dots) that also highlights interim up/down trends. Note the indicator's interesting level at Friday 7/27 of exactly 2808.34. That was Friday's low and provided support to technically avoid reversal of trend (but I doubt it will hold, perhaps by Monday 7/30). Lastly, MACD indicator (bottom) has flattened and looks like it will probably crossover and head lower.
In summary, expectation is still an overall uptrend to new highs, but with near term weakness. A healthy pullback is estimated using several measures (Fibonacci retrace of different degrees, Elliott Wave Theory) with target range at 2750 (yellow line) for a reasonable balancing point. That level is just below the 50d sma for this lower degree movement, too (within wave 5).
Lastly, July 31st will allow for July's "normalization" to the Fed's Balance Sheet. It is also settlement date for part of last week's new issuance by Treasury. Those combined events may impact markets on Tuesday.