S&P500 Index Forming Weekly Inverted Head and Shoulder Pattern?This week, we take a look at the technical analysis of S&P500 from monthly down to 4Hours, in order to see any trading opportunities in the market and the US market in general. Here, is the index forming valid inverted head and shoulder price pattern?
N.B
- Let emotions and sentiments work for you
-ALWAYS Use Proper Risk Management In Your Trades
Sp500index
S&P500 trading flat
In our previous post, we mentioned that the index is overextended and indeed the index trades in consolidation last week.
The S&P500 trades in flat as it break out of the ascending trend line, invalidating short term bullish momentum.
Short term support level at 3915 region and a breakout of this support can indicate more downside towards 3752 region.
40 Bar Cycle Chart - S&P 500 SPY SPX ES - Updated 121022 Given that we are headed into the release of the November Consumer Price Index this upcoming (Tuesday, December 13th ) and also the December Federal Reserve Interest Rate Decision (Wednesday, December 14th) , are markets set up for another short opportunity into the end of January (Q1)?
SPY Daily Chart Template
www.tradingview.com
Which camp are you in on the short-term (end of year into Q1/23') direction of markets?
Camp A: We are likely we headed for new lows in Q1/23 (Fluctuating Inflation + Persistent Price/Wage Pressures + Hawkish FED).
Camp B: We are likely to break the downtrend into the start of Q1/23' (Peak Inflation + Deflationary Forces + Dovish FED).
Let me know your prediction in the comments below!
SPX Daily TA Cautiously BearishSPXUSD daily guidance is cautiously bearish. Recommended ratio: 35% SPX, 65% Cash.
* US November PPI came in at 0.3%, a bit higher than the consensus estimate of 0.2% after rising 0.2% in October . This sent Risk-On markets lower as fears of another 75bps rate hike returned to the table. One good thing about November's PPI is that it increased 7.4% from last November, compared to 8.1% in October. Expectations for China's reopening are continuing to materialize as 28 oil tankers remain backlogged in the Black Sea due to Turkey's recent request for insurance checks on Russian oil tankers . Meanwhile the EU faces an energy crisis exacerbated by recent oil price caps and the Russia/Ukraine war that many fear will spill over into a global financial meltdown . However, if US November CPI prints lower and the FOMC follows through on a loose commitment to a 50bps rate hike, selling pressure may be alleviated in the near term.
DXY, US Treasurys, VIX, GBPUSD, JPYUSD, CNYUSD, HSI, NI225, N100, Energy and Metals finished up on the day. US Equities, US Equity Futures, Cryptos, Agriculture and EURUSD finished down.
Key Upcoming Dates: US November CPI 830am EST 12/13; Last FOMC Rate Hike Announcement of 2022 at 2pm EST 12/14; US November New Residential Construction at 830am EST 12/20; US Final Q3 GDP Estimate at 830am EST 12/22; US November PCE Index at 830am EST 12/23; UofM Consumer Sentiment Index at 10am EST 12/23. *
Price finished the day trending down at $3934 after being rejected by the uptrend line from 10/13 as resistance, it's now approaching a retest of $3913 minor support. Volume remains Moderate (moderate) and favored sellers in today's session after favoring buyers in the previous two sessions, a clear indication of PPI induced fears. Parabolic SAR flips bullish at $4090, this margin is mildly bullish at the moment. RSI is currently trending down at 49 after being rejected by 52.68 resistance, the next support is the uptrend line from January 2022 at 46. Stochastic remains bearish after a bullish crossover attempt was rejected at 5, it is currently trending down at 3.5 as it approaches a retest of max bottom. MACD remains bearish and is currently testing 33 support. ADX is currently trending down at 15 as Price continues to see selling pressure, this is mildly bullish at the moment.
If Price is able to bounce here then it will likely retest the uptrend line from 10/13 at ~$4k as resistance . However, if Price continues to break down here, it will likely formally retest $3913 minor support before potentially retesting the 50MA at $3840 as support . Mental Stop Loss: (one close above) $4058.
TSLA still has further downside to goTSLA stock has been on a selloff recently. Despite that it seems that the stock still do have further downside to go. However, we are soon reaching a critical level. With both a completetion of a 1 to 1 from the most recent pivot, in addition to that we are reaching a critical keylevel, there seems some hope for the bulls.
SP500 a short term outlook 🦐SP500 on the daily chart after the recent high tested the descending trendline at the 0.618 Fibonacci level and started a retracement move to the 0.5.
The price is now moving over a daily support and a possible break can happen.
How can i approach this scenario?
I will wait for the US market open and if the market will break and close below i will consider a nice short order according to the Plancton's strategy rules.
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Follow the Shrimp 🦐
Keep in mind.
• 🟣 Purple structure -> Monthly structure.
• 🔴 Red structure -> Weekly structure.
• 🔵 Blue structure -> Daily structure.
• 🟡 Yellow structure -> 4h structure.
• ⚫️ Black structure -> >4h structure.
Here is the Plancton0618 technical analysis , please comment below if you have any question.
The ENTRY in the market will be taken only if the condition of the Plancton0618 strategy will trigger.
Does the yield curve inversion signal recession?The famous negative curve.
This market concept is used when the US02Y or US03Y operate at higher levels than the US10Y, this behavior usually anticipates recessions, but why does this happen?
The inversion of the yield curve distorts the expected functionality of the financial system.
Under "normal" conditions, raising funds in the short term for investment in longer terms is used to provide positive arbitrage between interest rates on liabilities (paid) and assets (received), a strategy subject to the limits of the rollover capacity of the liabilities and raising new funds.
The availability of assets with higher premiums and liquidity, US02Y and US03Y, makes it less attractive to offer funds for longer terms < US10Y, and more expensive to raise funds for those who demand funds for shorter terms.
So the interest curve is considered a kind of thermometer of what lies ahead in an economy, and it is the graphic representation of how much investors are charging to lend money in different maturities, and once it is inverted, it means that it is more expensive to borrow in the short term than in the long term – an unusual thing, because more distant payment dates mean greater risks for the borrower.
In the US economy, a widely documented fact is that yield curve inversion (i.e., when there is a negative differential between long-term versus short-term bond yields) is a good leading indicator of periods of economic contraction. four to six quarters ahead.
According to data available on the Federal Reserve website, yield curve inversion has preceded every US recession since 1950, with the exception of a false signal in 1967.
There is also evidence that indicators of this nature are important predictors of periods of economic contraction in other countries.
But are there any silver linings to this unusual reversal scenario? Yes, in these moments of greater uncertainty we have an interesting opportunity to buy good companies at low prices.
This is because after the monetary tightening cycle, the economy usually weakens, during this period risk assets suffer, considering that their future projections will suffer due to the scenario, so many of the market participants seek security in bonds, others seek to anticipate the recovery considering that as soon as this CORRECTIVE cycle ends, a new UPWARD CYCLE tends to maintain perennial companies and give birth to many new companies that arise in the face of challenging scenarios.
Energy stocks have topped... For NowFollowing the recent oil selloff the XLE sector is now pulling back. With a clear divergence in the RSI with the 3 recent price tops, it seems like the XLE has completed 5 waves up. Following that is a 3 wave correction as a flat and is now preparing to finish the last leg of it, before exploding higher sometime next year.
S&P500 closes lower for fourth day as recession fears biteThe S&P500 index closed yesterday at its lowest point in four days following a steady decline as investors in American stocks concern themselves with the possibilities of a recession.
The prestigious index which contains some of Wall Street's most heralded blue chip giants lost 1.44% to close at 3,941.26, while the Nasdaq Composite sank 2% to finish at 11,014.89. The Dow Jones Industrial Average dropped 350.76 points, or 1.03%, to settle at 33,596.34.
The majority of the losses in this week's retraction in US stock values have been caused by bank stocks as well as shares in some media companies, which is perhaps in line with the concern about exposure to unserviceable debt by individuals and businesses should a recession bite.
Investment banks are taking a cautious stance, and Morgan Stanley this week released news that it plans to make redundancies amounting to approximately 2% of its workforce, and whilst inflation in the United States has actually decreased and is now standing at around 7.7%, it is well over 10 in the UK and in some parts of Europe, where many large American corporations have substantial operations and have to fork out more capital to keep pace with the increasing price of everything from materials to logistical costs and wages.
When considering yesterday's declines, the S&P is now down 3.2% this week and the NASDAQ has decreased in value by 3.9%.
The Federal Reserve is still looking at interest rates and has taken a very conservative approach, but it appears that analysts and investors have not ruled out the possibility of a recession taking place across the United States in 2023, even if it is not likely to be to the same extent as the impending recessions in Europe and the United Kingdom.
Disclaimer: This forecast represents FXOpen Companies opinion only, it should not be construed as an offer, invitation or recommendation in respect to FXOpen Companies products and services or as financial advice.
How does the market react after inflation peaks ? Hi guys, today I bring you an important point for macro analysis.
Many believe that seeing a significant improvement in economic data, especially those linked to inflation, showing that it is slowing down is something positive, is it really?
In a way, it's a positive metric when looked at in isolation, because inflation brings major disturbances to the economy, but that's a topic for another post.
What matters is that the mere fact that inflation has marked a possible peak and the Fed has started to reduce interest rates does not mean that we are going to have a bottom in the market!
Currently big banks are warning about the recession, and this for us, is not news, but look at this headline: "Jamie Dimon, CEO of JPMorgan Chase, talks of recession next year"
But here we had already been talking about this recession for some time, after publishing a study talking about the inversion of the yield curve, in that study there was the following sentence: "According to the data available on the Federal Reserve website, the inversion of the yield curve preceded all American recessions since 1950, with the exception of a false signal in 1967."
This publication was made on the
So, yes, we have a contracted recession, but what does that have to do with peak inflation?
Inflation brings, as a consequence, a scenario of uncertainties in the economy, and discourages new investments from being carried out. In practice, this causes difficulties for the country's economic growth, and once we have this combined with high interest rates, growth becomes even more difficult.
So, even though inflation has reached its peak, interest rates are still very high, and we continue to struggle with economic growth and this usually happens, see the chart, after inflation peaks we had big drops.
Will we see something similar again?
Tell me your opinion here!
SPY SPX Short? S&P 500Quick look at the S&P500 SPY
Technical is working great on this one.
We are clearly in a rising wedge, unclosed gap, and RSI divergence. Many things are working against us.
Chart:
- Rising Wedge, will break into down side on a 1H
- Unclosed gap at $380
- RSI divergence and shows bearish trend.
Will we test $380?
SP500 - Set Up ShortThe situation suggest a potential short on wave III Major
From my point of view the stop is fixed above the actual max
SP500 IDEA HELLO GUYS THIS MY IDEA 💡ABOUT ES1! is nice to see strong volume area....
Where is lot of contract accumulated..
I thing that the sellers from this area will be defend this SHORT position..
and when the price come back to this area, strong sellers will be push down the market again..
DOWNTREND + SUPPORT from the past + Strong volume area is my mainly reason for this short trade..
IF you like my work please like and follow thanks
S&P 500 (2H chart) @ 6 December 2022S&P 500 (2H chart) @ 6 December 2022
Drilling down to the more granular 2-hour chart, it's clear that the S&P 500 is at another make-or-break situation...
- Index is testing the strong support (blue line)
- Index previously rejected two strong resistances:- (i) mid-term trendline (red line) and (ii) long-term counter-trendline (orange line)
S&P 500 @ 6 Dec 2022S&P 500 @ 6 December 2022
- Rejection of strong counter-trendline (orange line)
- Last night, tested the previous Head-and-Shoulder's (blue line) Neckline (red line)
If Index rebounds from here (and there's favourable news from the FOMC meeting on 15 Dec), we will likely see a break of the strong counter-trendline (blue arrow). I would be bullish for the mid-term.
If the current support breaks (red line), we might see the Index falling towards 3700-3800 levels again (red arrow).