S&P 500 (SPX) has been maxed out for a while now, and I am quite bearish on this index as you might already know from my previous analyses.
The reason I am bearish is because of the signals that I getting from the above chart. So come and read these signals with me, and later share in the comments section and tell me what you think... Let's get started!
S&P 500 Index Prints Additional Weakness
Our main focus for signals in past analyses was mainly a bearish divergence on the MACD and RSI, but now additional weakness is showing up:
On the chart above we can see how the ~2815 level, marked with a purple dash line, has rejected the SPX over and over in a 1,2,3 sequence. On the 13 March, the SPX had its third (sixth) rejection from this resistance after the bounce.
We can see decreasing trading volume, which is a signal that points to lack of momentum for the move that is in play.
The daily candle for the 13 March hit a high at 2821.24, making it higher than the peaks of the 25th Feb. and 4th March. But when you look at the MACD, you can see it going lower and lower; here is the bullish divergence once more. The same can be spotted on the RSI.
In a nutshell, we have a triple top, decreasing volume and strong bearish divergence.
According to the signals above, the SPX will make a strong down move soon. For these signals to be invalidated, the SPX needs to print a high volume candle above 2821 and follow up by breaking its all-time high.
What's your take on the next S&P 500 Index move?
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@alanmasters, welcome, what are your views on the US economy?
AlanSantana
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@Apex_Managed_Capital, Looking from a stock market perspective, it is overbought.
Dimolad
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@Apex_Managed_Capital, lol noooooooo.....
You have the EU and China who have built their economy on this antiquated 17th century mercantilist model of selling stuff to foreigners and bringing the money back home but Global trade has peaked in 2015 and trade is in a downward trend. The USA is the only country with a strong enough domestic economy to keep going in this environment. The US economy is holding up the whole world right now.
Everyone keeps calling for this crash without even considering the global capital flows. Where did all the money come from to jack up the US markets from the December lows? It was FOREIGN money - capital flows coming in from Europe and Asia. Just look at the Euro charts to see where all the european dough has went to.
Fund managers are reporting massive cash holdings amongst US retail investors. They're not even in the markets yet.
Sometimes you got to look beyond a single chart.
ApexFX_Pro
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@Dimolad, I think the markets are been manipulated by the FED and Trump just to make it look like everything is ok.... then boom all of a sudden it will crash.
Dimolad
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@Apex_Managed_Capital, but its impossible for the FED to manipulate the market because they cannot single-handedlycontrol market participants confidence. The FED chase the markers, they dont control them. Global capital is CHOOSING the US equity markets because its the best house in a bad neighbourhood.
You got a huge public sector bond bubble, add in the fact that the internal chaos amongst all the governments- if you were a massive instituional investor or a pension fund manager, would you lock in your capital for 30+ years with a dodgy government whos paying like 5% MAX yields when you gotta make a minimum of 8% annual return just to break even? You'd be locking in a 30 year loss.
The US equity market is the best place to go for big instituional money. So why fight the log-term trend?
ApexFX_Pro
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@Dimolad, Cant they? or is that what they want you to believe? Wherever big money can be made manipulation is always there.
These are just my views, everyone has there own, I'm just thinking outside the box.
Dimolad
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@Apex_Managed_Capital, No they cant. Its mathematically impossible. Its a complex system with far too many inputs & other elements involved. If they were soo smart and able to control and manipulate markets like you say, then there wouldn't have been no financial crisis in 2007 but the banks, insurance companies and the FED were on the WRONG side of the trade.
If they keep purchasing government bonds when the governments have NO intention of paying the principal back, they'll be on the wrong side of the trade again.
Central banks are not as smart as everyone thinks.
Anyways, I do understand some of the bearish technical indicators and I am sure there will be a strong pullback.
Happy trading
Captain_Walker
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@Apex_Managed_Capital, Sure - but that doesn't mean that the stock markets are gonna crash soon. I know you didn't say anything about that. 😎 (this does not mean that I'm personally bullish on the US Economy or about US indices).