S&P Respects Fibonacci & Weekly Moving Averages for Bull Trap
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It happened again. I heard someone who is otherwise extra-ordinarily informed and educated blamed market movements on some comment from the FED or news about a trade deal and it is so powerfully wrong I have to return to the charts to see what has happened technically.
The week of December 24, 2018 saw the price action hit the 200-week moving average and there was aggressive buying at that level, which by some sort of math magic, syncs up with the price action finding support at the 0.236 Fibonacci retracement level. The last time we found support at a fib level and the 200W Moving average concurrently was between January and February 2016 at the 0.5 level (of course we didn’t know that was going to happening at the time, and I wasn’t even swing trading at that time).
The uptrend looks like it is slowing or reversing prior to the 20 weekly moving average and I suspect the most we will do is wick through that as resistance. Those in the media or with their own youtube channel will try and place blame on individual actions or evens, but this seems to be a purely technical rejection at resistance.
If you review my linked post S&P Short: Fundamental and Undeniable TA you will see I went over the RSI & MACD divergences going back the 90s and the associated drops. I still feel that we are looking at between a 45 to 60% drop. Of course, the math going up isn’t the same as the math going down so a .68% retracement is about a 48% drop from the all time high which puts us near a somewhat sloppy low volume node at ~ $1,550. For that to happen the price action will probably find support and likely break through the Point of Control (dashed blue line) that closely matches the 0.382 retracement level valued at $2,071.
Chasing the news or chasing any one policy statement for knee jerk reactions, the vast majority of times, won’t help you predict the larger movements. News about the money supply or the adoption of a technology, good or service (and I mean news, not opinion pieces or feel good crap) can help you identify what you want to get into for fundamental reasons but the price is still going to be victim to major trends in the money supply and rhythms of the market. The chart below shows steadily increasing prices but a steadily declining Average True Range, which predicts a reversal. This behavior in green helps define wave 3 and wave 5, a chain of evens set into action three years ago. The RSI divergence also helps define wave 5. Now we still need to ABC correct on our way down and over a year to watch this dumpster fire. If you want to know why this will last over a year please take a look at my Ultimate FUD Post.
The week of December 24, 2018 saw the price action hit the 200-week moving average and there was aggressive buying at that level, which by some sort of math magic, syncs up with the price action finding support at the 0.236 Fibonacci retracement level. The last time we found support at a fib level and the 200W Moving average concurrently was between January and February 2016 at the 0.5 level (of course we didn’t know that was going to happening at the time, and I wasn’t even swing trading at that time).
The uptrend looks like it is slowing or reversing prior to the 20 weekly moving average and I suspect the most we will do is wick through that as resistance. Those in the media or with their own youtube channel will try and place blame on individual actions or evens, but this seems to be a purely technical rejection at resistance.
If you review my linked post S&P Short: Fundamental and Undeniable TA you will see I went over the RSI & MACD divergences going back the 90s and the associated drops. I still feel that we are looking at between a 45 to 60% drop. Of course, the math going up isn’t the same as the math going down so a .68% retracement is about a 48% drop from the all time high which puts us near a somewhat sloppy low volume node at ~ $1,550. For that to happen the price action will probably find support and likely break through the Point of Control (dashed blue line) that closely matches the 0.382 retracement level valued at $2,071.
Chasing the news or chasing any one policy statement for knee jerk reactions, the vast majority of times, won’t help you predict the larger movements. News about the money supply or the adoption of a technology, good or service (and I mean news, not opinion pieces or feel good crap) can help you identify what you want to get into for fundamental reasons but the price is still going to be victim to major trends in the money supply and rhythms of the market. The chart below shows steadily increasing prices but a steadily declining Average True Range, which predicts a reversal. This behavior in green helps define wave 3 and wave 5, a chain of evens set into action three years ago. The RSI divergence also helps define wave 5. Now we still need to ABC correct on our way down and over a year to watch this dumpster fire. If you want to know why this will last over a year please take a look at my Ultimate FUD Post.
Ghi chú
Above is a fractal Elliot wave that looks at the last two years. The colored lines show different stages of bearish divergence creating topping bevavior off of the bear trap we have been observing on the weekly and monthly basis. Next major stop would be the point of control on the fractal.
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