(Sorry, reposting to show full chart)
Probably one of the most-watched Fib extensions in the market nowadays. The fibo 1.618 extension from 2007 highs - 2008 lows ('the Great Reccesion') is so far confirming as a top for the S&P 500. Questions about the validity of the study aside, it's accuracy is remarkable.
Technically speaking, August 2015 is shaping up to be quite similar to August '11, although in a different macro environment and (obviously) from different levels.
Some distressing technical cues:
1. Yearly Pivot Point (1960) and MA(9) (2058) are so far lost as key support points.
2. RSI(14) monthly is going below 70, and showing a multi-year divergence
3. Before August's big down candle, SPX has shown 4 months of Distribution candles (upper wicks bigger than the candle's body), with monthly closing levels barely above the 2100 mark.
I'd be careful about buying this dip and I think there's a real chance of this market going down en masse. Some fundamentals have to validate such a bear market, though. A confidence crisis through further weakening in China and other Emerging Markets, a chaotic liftoff in the US, geopolitical uncertainty derived from the worldwide oil crisis (ISIS going full-berserk, for example), or the bursting of the US HY market, would be some of the fundamentals behind such a move.
On speculation, I'd be looking to short SPX on any bounces below 2058. Targets are Support lines (with a timeframe not exceeding the end of 2015):
Target 1: 1835
Target 2: 1615
Target 3: 1475
The other way would be buying 1 or 2-year puts on SPY, although with VIX so lofty I think the risk-reward in there isn't quite good nowadays.
Any feedback into this would be much appreciated. I'm stil considering on whether play this with real money or just paper trading.
Probably one of the most-watched Fib extensions in the market nowadays. The fibo 1.618 extension from 2007 highs - 2008 lows ('the Great Reccesion') is so far confirming as a top for the S&P 500. Questions about the validity of the study aside, it's accuracy is remarkable.
Technically speaking, August 2015 is shaping up to be quite similar to August '11, although in a different macro environment and (obviously) from different levels.
Some distressing technical cues:
1. Yearly Pivot Point (1960) and MA(9) (2058) are so far lost as key support points.
2. RSI(14) monthly is going below 70, and showing a multi-year divergence
3. Before August's big down candle, SPX has shown 4 months of Distribution candles (upper wicks bigger than the candle's body), with monthly closing levels barely above the 2100 mark.
I'd be careful about buying this dip and I think there's a real chance of this market going down en masse. Some fundamentals have to validate such a bear market, though. A confidence crisis through further weakening in China and other Emerging Markets, a chaotic liftoff in the US, geopolitical uncertainty derived from the worldwide oil crisis (ISIS going full-berserk, for example), or the bursting of the US HY market, would be some of the fundamentals behind such a move.
On speculation, I'd be looking to short SPX on any bounces below 2058. Targets are Support lines (with a timeframe not exceeding the end of 2015):
Target 1: 1835
Target 2: 1615
Target 3: 1475
The other way would be buying 1 or 2-year puts on SPY, although with VIX so lofty I think the risk-reward in there isn't quite good nowadays.
Any feedback into this would be much appreciated. I'm stil considering on whether play this with real money or just paper trading.