US Market Technicals Ahead (11 Jan – 15 Jan 2021)Market will likely be focusing on the prospects for a bigger stimulus package after Friday’s employment report showed the U.S. economy shed jobs for the first time in eight months in December amid a resurgence of Covid-19 infections. A further snapshot of how the economy is performing will be presented with upcoming Friday’s release of data on inflation and retail sales.
Additionally, earnings season will get underway with major US banks set to release fourth quarter earnings results on Friday.
Here’s what you need to know to start your week.
S&P500 (US Market)
The benchmark index ($SPX) continued with a 3rd consecutive week of rally, closing with a modest gain of +1.83% (68.6 points) for the opening week of 2021. This rally have continued to establish a new all time high level at 3,826 points, also breaking out of a 9 weeks trend channel congestion that was highlighted over the weeks.
With plenty of eutrophic moves in highly speculative themes over the past weeks (i.e. Electric Vehicles, Bitcoin, Alternative Energy and Biotechnology), there were observation that some of the previously market-leading mega cap companies are not in participation of the week’s rally. Several of the higher profile companies, particularly the FAANG, remain either in a consolidated triangle chart pattern, or a box ranged rectangular chart pattern. Additionally, $SPX traded lower on the first two days of the year, with the month long highest sessional volume observed on Tuesday alone.
At the current junction, the 20DMA have been nicely supporting $SPX in rally since 4th November 2020. The significance of 20DMA towards $SPX daily current price action is also observed in the various rebound highlighted in the chart (arrow), particularly thrice in December 2020 and once in January 2021. There is also a significant pick up in trading volume since the start of 2021, and it is imminent for market volatility to further uptick towards a 50 points ATR14 range within the next two weeks.
The immediate support to watch for any potential weaknesses is at 3,780 level, a confirmation retracement for Friday’s Bearish Hanging Man candlestick pattern.
Top 3 things to watch this week:
1. Stimulus hopes
Stocks closed at record highs on Friday, despite data showing the U.S. economy suffered its first net loss of jobs in eight months in December, after Biden said his economic relief package will be in the trillions of dollars.
Biden said his administration’s economic package will also include unemployment insurance and rent forbearance. The package is due to be unveiled on Thursday.
2. Economic data, Fed speakers
The U.S. is due to release data on consumer price inflation on Wednesday, while retail sales figures for December are due out on Friday. Inflation is expected to tick slightly higher, but remain subdued, while retail sales are expected to have been dampened by the surging virus.
Fed Chair Jerome Powell is to speak on Thursday. The U.S. central bank has indicated that interest rates will remain on hold near zero through at least 2023 and said the path of the economy will depend significantly on the course of the virus.
3. Banks kick off earnings
Big banks will kick off the U.S. corporate earnings season in earnest with JPMorgan (NYSE: $JPM), Citigroup (NYSE :$C) and Wells Fargo (NYSE: $WFC) posting fourth-quarter results on Friday – the first S&P 500 companies to report for the last quarter of coronavirus-stricken 2020.
Some investors expect company earnings and economic data to play a greater role in moving stock prices this year.
Spxsignals
S&P500 aims at 3800Pattern: Channel Up on 1D.
Signal: Buy (a) if the MACD makes a Bullish Cross (every prior 1D Bullish Cross has delivered an extreme rise), or (b) if the RSI approaches its Higher Lows trend-line.
Target: (a) 3880, (b) 3800
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S&P500 preparing an end of the year rally to 3780SPX continues to trade within the Channel Up that I previously spotted and right now the keys are a certain Fibonacci sequence as well as the MACD formation on the 4H time-frame.
As you see the MACD is printing a similar formation with November 23 - 26. That was when S&P500 made its aggressive Bullish Leg from 3545 to 3655. It made its top on the -0.1 Fibonacci extension then pulled back to the 0.382 Fib retracement and took some time to price a Higher High on the -0.618 Fib extension.
If the same pattern is repeated, then the price could pull back seeking support within the 4H MA50 and 0.382 Fib and then rise to the -0.618 extension which is around 3790. That would set up S&P on a nice end-of-the-year rally.
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S&P500 Targeting 3720 short-termPattern: Rising Wedge within Channel Up on 4H.
Signal: Buy as the price found support on the 4H MA50, which has been holding since November 23. If the Rising Wedge breaks, buy near the Higher Low of the Channel Up.
Target: 3720 (just below the -0.382 Fibonacci extension like every previous Higher High).
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S&P500 Trading PlanPattern: Channel Up on 4H.
Signal: (A) Buy either on the Channel's median or on the Higher Low trend-line or if the 3675 Resistace breaks first. (B) Sell below the 3545.
Target: (A) 3670 (just below the Resistance). If 3675 breaks target 3710 (0.5 Fibonacci extension). (B) The 4H MA200 (orange trend-line).
Previous S&P500 trade:
S&P500 Trading PlanPattern: Triangle on 4H.
Signal: (A) Buy as long as the Higher Lows trend-line holds, (B) Sell if it breaks.
Target: (A) 3595 (just below the Lower Highs), (B) 3485 (just above the 4H MA200).
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Can the market rise more during Biden's Presidency than Trump's?This is a simple chart showing the performance of the S&P500 under each President since the Ford administration is 1974.
As you see contrary to popular belief, the stock market in modern times has done (much) better under a Democrat President. Bill Clinton has had the strongest performance with more than +200% in gains from the day he went into the office till the day he left, while George W. Bush the worst and the only negative with -34% in losses.
Also this pattern shows that after every Republican Presidency, the Democrat administration that follows performs (much) better. Carter almost tripled Ford's performance, Clinton more than tripled George H. W. Bush's score. Needless to say what Obama did to George W. Bush's disappointing Presidency.
So in my opinion Wall Street shouldn't be seeing Trump's defeat as a setback, but as the start of a Presidency of more stock market gains than Trump's. History has a tendency to repeat itself. Wouldn't you agree? Let me know in the comments section!
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S&P500 Buy Signal / Strong supporting linePattern: Higher Lows on the 4H chart.
Signal: Buy as the index rebounded not only on the former Lower Highs trend-line (dashed line), but also on the newly formed Higher Lows trend-line.
Target: 3660 (just below the 3675 Resistance).
Recent S&P signals:
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S&P500 Time to break above the Stimulus-Elections Triangle?Since the September 03 Top (All Time High), S&P500 has entered a volatile pattern in the form of a Triangle. The major drivers of this weakness have fundamentally been the U.S. stimulus being delayed and then the elections.
Today the Lower Highs trend-line of this Triangle is being tested. If broken, I expect the 3590 Resistance to be tested, with an extension to the 1.236 Fibonacci at 3620 as it happened with the July 23 extension.
The reason I give more probabilities to an upward break-out from the Triangle is the fact that the MACD on the 1D time-frame has (just) formed a Bullish Cross much earlier than the previous time, something that may accumulate buyers. Also the RSI has broken above its Lower Highs trend-line already, something that was a bullish signal 1 year back. On top of that the MA30 just crossed above the MA50 which on a one month horizon at least, has historically been a bullish signal (we have to go years back to see immediate selling after a 1D MA30/50 Bullish Cross.
Most recent trade on S&P500:
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S&P500 The elections can kickstart a +30% yearly rally!The chart comparison doesn't need much explaining. I compare the price action on the 1W time-frame that led to the 2016 actions with today's sequence.
Both patterns are Megaphones on a descending RSI with the 1W MA50 (blue trend-line) acting as a Support on the Megaphones late stage. On the November 07 2016 1W candle, S&P rebounded, starting a non-stop rally that didn't give any important pull-back until January 2018, achieving a +36% rise!
Can S&P rebound on this week's election candle, completing the (e) leg?
Feel free to share your work and let me know in the comments section!
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S&P500 targeting 3500Pattern: Triangle on 4H.
Signal: Buy on the next MA50 contact as the price breached the 4H MA200 as in October 01. Also the MACD made a strong Bullish Cross, similar in strength with the September 24 - 29.
Target: 3500 (potential contact on the Lower High trend-line of the pattern).
Most recent S&P signal:
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S&P 500 Long Setup!I think we will have one more leg up at least before the election. If you find this useful please leave a like I would appreciate it :)
S&P500 got rejected on the 4H MA50! More pain ahead?The index is trading within a Channel Down on the 4H chart and it just got rejected on the most important Resistance test it had: the 4H MA50 (blue line). Even though the 4H MA100 (green line) is in its way as Support, this rejection has the potential to end lower within the Channel and close to the 4H MA200 (orange line) just below 3400.
As you see S&P though has been consolidating within the 4H MA50 and MA200 levels the whole week, and this price action is similar to when it was consolidating again within those two levels (but this time with the MA50 as Support and MA200 as Resistance) in late September/ early October. The RSI action is identical.
Technical risk-management theory indicates that we should engage only if this consolidation range breaks, i.e. either below the MA200 towards 3340 or above the MA50 towards 3550. See how the Fibonacci levels are perfectly aligned.
What do you think? Is there more pain to come?
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S&P500 Will the 4H MA50 be enough again?Last time we saw how the 4H MA50 has effectively worked as a buy entry since the late September break-out:
The recent fall on S&P500 has panicked many but technically it seems like a healthy pull-back taking into account the very aggressive rise since October 06 that broke above the (former) Channel Up.
Moreover, every pull-back after a new Higher High is possible to run on a progressive Fibonacci retracement sequence: first it was 0.918, then 0.786. Both happened to be exactly on the 4H MA50 (blue trend-line). Right now the logical point on this sequence (assuming it is previous Fib - 0.2) would be 0.518. That is exactly on today's low. The 0.618 is slightly lower at 3420 but in my opinion if the index fails to close today above the 0.518 Fib, the true Support to test would be the 4H MA200 (orange trend-line).
Do you think the 4H MA50 will be enough again or S&P will seek the help of the 4H MA200? Feel free to share your work and let me know in the comments section!
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SPX relation with Stocks above 200D MA,70 selling & 24 Buying I did not like this a bit. I do not no way but it seems it was quite hard to analyse !. Even though, it is the 200d MA it gave tops that are not significant at all
that's maybe one of its draw back. high opportunity cost. Or maybe it is not my day of analyzing :-). i did my best LOL.
further examination of this indicator is needed. Also, do not forget that i might missed allot of tops & bottoms :-)
wish you all the best.
S&P500 First 4H Golden Cross since April !** The Golden Cross **
S&P just finished a very bullish week and on the 4H chart it is about to form a Golden Cross (MA50 crossing above the MA200). That will be the first time to see a 4H Golden Cross since April 15. That alone is a very bullish sign but it's not the only one we should consider.
** Symmetry on Inverse H&S and Fibonacci levels **
The main pattern was an Inverse Head and Shoulders, from which the price seems to be detaching from as S&P is recovering from September's fall. In fact so far the recovery seems to be symmetrical as the Highs and Lows of the September downtrend, seem to be filled quite accurately on the current uptrend. The Fibonacci retracement levels appear to be quite aligned.
The first Lower High of the downtrend (September 04) was at 3490. If that level is rejected (or at least leave a margin up to the 0.786 Fib), then it is possible to see a pull-back to the 4H MA50 (blue trend-line) as the Golden Cross is formed, in a similar way it did during the Death Cross (September 15). On any other occasion, it should be a straight rise to the All Time High.
Which of the two do you think it is going to be? Feel free to share your work and let me know in the comments section!
Most recent signal on S&P:
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S&P500 Why do you keep ignoring the 4H MA50?Isn't that true? Since the index broke above it on September 28, the MA50 on the 4H chart has been the most reliable buy entry you could get. So far (counting yesterday) this happened three times. I've mentioned this potential on a few studies with the most recent one as seen below:
Technically every Higher High on this Channel Up is on the 1.382 Fibonacci extension of the previous High. See how consistent this has been on two occasions. This sets the target at 3460.
Based on a recurring RSI sequence (Channel Down accumulation into a strong bullish break-out), the price may be preparing an even stronger jump.
Don't lose sight of the greater picture:
Are you gonna keep ignoring the 4H MA50? Feel free to share your work and let me know in the comments section!
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S&P500 Rebound on the 4H MA50Pattern: 4H MA50 rebound.
Signal: Buy as last time the 4H MA50 was tested and held as Support, a 2 month rally started. RSI and MACD are similar to that fractal of early July.
Target: 3480 (the -0.5 Fib extension).
Most recent S&P signal:
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SPX & MACDs Monthly Relations 18 selling & buying singles 1980it is a dangerous indicator if you are a trading a monthly swings . It lies allot :-) . 30 % picking Tops , better than weekly in some areas and
worse than weekly in others. they are competing,weekly & monthly, who is more worse than the other ;-)
wish you all the best.
S&P500 Buy Signal (long-term)Pattern: Channel Up on 1D.
Signal: Buy as the price reached the 0.618 Fibonacci retracement level from its previous bottom.
Target: 3590 medium-term (Resistance) and for long-term traders 3900 (+21.90% rise from this bottom).
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