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The S&P 500 (SPY) labored its strategy to one other new all-time excessive of 5189 this week, simply above the Fibonacci goal of 5179 outlined in my final article. To be trustworthy, I almost shut down my screens early on Friday because it surged increased – in any case, 16 out of the final 18 weekly closes have been increased and Fridays have been notably robust. However then one thing completely different occurred – a reversal of 66 factors, which took the S&P500 right into a decrease weekly shut. Maybe extra importantly, the “Magnificent 7” misplaced its basic, Nvidia (NVDA).
Friday’s reversal might be important given the weekly exhaustion sign, or it might simply be a quick drop like different corrections since late January (two of the final three corrections lasted just one session). This weekend’s article will have a look at the way to inform these two eventualities aside. Numerous methods shall be utilized to a number of timeframes in a top-down course of which additionally considers the foremost market drivers. The purpose is to supply an actionable information with directional bias, necessary ranges, and expectations for future worth motion.
S&P 500 Month-to-month
The March bar has now tagged the 5179 degree, which is the 127% Fibonacci extension of the 2021-2022 drop. Now that new highs have been made this month, a bearish bar can kind fairly simply with a drop again into the February vary beneath 5111. Nevertheless, it will want to shut beneath this degree and ideally a lot decrease to cement the reversal sample.
SPX Month-to-month (Tradingview)
Above the 5179 Fibonacci extension, there’s a measured transfer at 5219 the place the present rally from the October ’23 low shall be equal to the October ’22 – July ’23 rally.
The 5096-5111 is the primary space of help and will set the bullish/bearish tone for the remainder of March. 4818 is the primary main degree on the earlier all-time excessive.
There shall be an extended look forward to the following month-to-month Demark sign. March is bar 4 (of a potential 9) in a brand new upside exhaustion depend.
S&P 500 Weekly
Not solely did this week’s bar make a decrease shut, but it surely additionally made a quick decrease low. Each had been marginal, however this was the primary weekly bar with a decrease low and decrease shut for the reason that first week of the yr. This indicators a change in character, however not an excessively bearish one, but. Certainly, the weekly sample shaped a “doji,” which is a sign of indecision. This will develop right into a reversal ought to the following bars preserve making decrease highs after which shut beneath the low of 5056.
SPX Weekly (Tradingview)
The 5189 excessive is the one actual resistance.
5048-5056 is a key help space. Under there, we might see 4918-20 fairly shortly.
An upside Demark exhaustion depend accomplished on bar 9 (of 9) this week. This normally results in a pause / dip of a number of bars (weeks).
S&P 500 Day by day
Friday’s reversal got here from the highest of the every day channel in addition to the Fib extension. An “engulfing” bar shaped, which is a dependable reversal sample. Moreover, the shut close to the low of the every day vary tasks continuation early subsequent week.
SPX Day by day (Tradingview)
The channel excessive is potential resistance and shall be round 5200 on Monday.
Minor help is 5105-111. Channel help may be very close to the 20dma round 5060 (and rising).
No every day Demark exhaustion sign can full subsequent week.
Drivers/Occasions
Fed Chair Powell’s testimony will need to have been music to the bulls ears as he acknowledged the Fed expects the “Goldilocks” situation to play out.
“We count on inflation to return down, the financial system to continue to grow…If that is the case, will probably be applicable for rates of interest to return down considerably over the approaching years,” he stated.
Powell’s dovish testimony gave the inexperienced gentle to robust information and one other scorching Jobs Report would have been one other constructive for the S&P500. Nevertheless, the indicators of cooling, revisions and weak spot within the Family Survey had been a detrimental.
Subsequent week’s focus shall be on CPI on Tuesday, which is predicted to rise to 0.4% m/m. Inflation readings needs to be pretty simple when it comes to market response – excellent news (decrease inflation) needs to be good for the S&P500 and vice versa.
There are two bond auctions due subsequent week on Tuesday and Wednesday. Thursday is busy, with PPI, Retail Gross sales and Unemployment Claims.
Possible Strikes Subsequent Week(s)
Friday’s bearish bar tasks some comply with by to the draw back early subsequent week. The 5105-5111 space is minor help and should result in a bounce, however so long as decrease highs are made with 5189 to protect the weekly “doji” reversal sample, then we must always see a take a look at of the extra necessary every day channel/20dma and the essential 5048-5056 space.
Given this space has marked the low within the final two weeks, there’s a good likelihood it breaks on the following take a look at and this could result in 4918-4920 within the coming weeks. Nevertheless, I believe worth might spend a while across the 5000 space to create a balanced (quantity) profile mid-way between the 4818 break-out and the 5189 excessive.
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