This is Possibly The Most Valuable Chart Around (ES)
Hi friends! Welcome to this update analysis on the S&P 500, via the weekly ES futures chart. Let's get right to it! Looking at the weekly chart, we can see that there are so many beautifully symmetrical things to highlight here — many of which I have covered in recent analyses.
Looking at the broad structure of the market, we can see that in the early to mid 2000's the S&P formed two distinct tops. In the year 2000, we had the dot com bubble top, and then in the year 2007, we had the top that was formed right before the financial crisis. What is important to note about that part of the market structure, is that those two tops were at the exact same level. When we look at the Fibonacci retracements from the low of The Great Recession, to the recent all time high, we can see that the 61.8% retrace corresponds EXACTLY with those highs. For those of you who don't know, the 61.8% Fibonacci retrace is arguably the most important number in all of technical analysis. It is a level that is constantly and reliably reverted to by market prices on a regular basis, possibly more so than any other retracement level. To see that the current 618 retracement corresponds exactly with those highs, is really something special.
With that said, if the market breaks out to new all time highs, and continues to rally, that would lift the 618 proportionally, thereby eliminating this very special confluence. I'm not saying that such an outcome is impossible, I'm simply expressing my amazement at this beautiful market symmetry with The Golden Ratio, especially as it pertains to such important pivotal moments in our market's history.
However, as I've said before, this beauty doesn't mean that the market can't or won't continue higher. That, on the other hand, purely depends on the market's ability to begin printing new all time highs again, and there is a very clear road-map for that right in front of us.
Looking at the moving averages on the chart, you can see that there is a very important pattern here. I like to take full credit for discovering this, because nobody posted about it before I did. With that said, there is a very clear pattern here of holds on the 200 week (in purple) and the 50 week (in orange.) To my long time followers, you probably have seen my previous analyses on this, and the pattern still holds. As you can see, price initially fell to the 200 week moving average and held it as support (pink circle.) Then, price rallied above the 50 week MA, and held support on it twice (green circles.) From there, the S&P entered a multi year bull market rally. The first warning sign that the market was preparing to correct, was on the first retest of the 50 week MA (yellow circle.) From there the pattern repeated itself perfectly two more times. Today, we are right after the second hold of the 50 week MA. So, that moving average is the absolute line in the sand for this structure. A sustained breakdown below the 50 week MA would be a deviation from the pattern, rendering it complete, and signaling a potentially deeper correction as a result. If we see something like that, it would tie in well with the fact that the 618 is currently where it is. In other words, a breakdown of this pattern of moving average support, would signal a top in the market, which would correspond with the current location of the 618.
On the other hand, if the S&P holds above the 50 week MA, and if it breaks out to new all time highs, I think we could potentially see a multi year bull run as a result. That's what should be expected, given the pattern on the chart. So, the market really is at a very interesting point right now. In short, new all time highs would signal a potential multi year expansion in the bull market. Likewise, a breakdown below the 50 week MA would break this multi year moving average pattern, which could signal that the top is in for the market.
On a side note, my personal recession indicator, which I published today, hasn't signaled the beginning of a recession yet. So, there is still potential for the market to head higher. That will be dictated though, by the aforementioned conditions.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Looking at the broad structure of the market, we can see that in the early to mid 2000's the S&P formed two distinct tops. In the year 2000, we had the dot com bubble top, and then in the year 2007, we had the top that was formed right before the financial crisis. What is important to note about that part of the market structure, is that those two tops were at the exact same level. When we look at the Fibonacci retracements from the low of The Great Recession, to the recent all time high, we can see that the 61.8% retrace corresponds EXACTLY with those highs. For those of you who don't know, the 61.8% Fibonacci retrace is arguably the most important number in all of technical analysis. It is a level that is constantly and reliably reverted to by market prices on a regular basis, possibly more so than any other retracement level. To see that the current 618 retracement corresponds exactly with those highs, is really something special.
With that said, if the market breaks out to new all time highs, and continues to rally, that would lift the 618 proportionally, thereby eliminating this very special confluence. I'm not saying that such an outcome is impossible, I'm simply expressing my amazement at this beautiful market symmetry with The Golden Ratio, especially as it pertains to such important pivotal moments in our market's history.
However, as I've said before, this beauty doesn't mean that the market can't or won't continue higher. That, on the other hand, purely depends on the market's ability to begin printing new all time highs again, and there is a very clear road-map for that right in front of us.
Looking at the moving averages on the chart, you can see that there is a very important pattern here. I like to take full credit for discovering this, because nobody posted about it before I did. With that said, there is a very clear pattern here of holds on the 200 week (in purple) and the 50 week (in orange.) To my long time followers, you probably have seen my previous analyses on this, and the pattern still holds. As you can see, price initially fell to the 200 week moving average and held it as support (pink circle.) Then, price rallied above the 50 week MA, and held support on it twice (green circles.) From there, the S&P entered a multi year bull market rally. The first warning sign that the market was preparing to correct, was on the first retest of the 50 week MA (yellow circle.) From there the pattern repeated itself perfectly two more times. Today, we are right after the second hold of the 50 week MA. So, that moving average is the absolute line in the sand for this structure. A sustained breakdown below the 50 week MA would be a deviation from the pattern, rendering it complete, and signaling a potentially deeper correction as a result. If we see something like that, it would tie in well with the fact that the 618 is currently where it is. In other words, a breakdown of this pattern of moving average support, would signal a top in the market, which would correspond with the current location of the 618.
On the other hand, if the S&P holds above the 50 week MA, and if it breaks out to new all time highs, I think we could potentially see a multi year bull run as a result. That's what should be expected, given the pattern on the chart. So, the market really is at a very interesting point right now. In short, new all time highs would signal a potential multi year expansion in the bull market. Likewise, a breakdown below the 50 week MA would break this multi year moving average pattern, which could signal that the top is in for the market.
On a side note, my personal recession indicator, which I published today, hasn't signaled the beginning of a recession yet. So, there is still potential for the market to head higher. That will be dictated though, by the aforementioned conditions.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-