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S&P Outlook For The Week
Submitted by Nic Lenoir of ICAP
We had discussed last week that even though the S&P future was back around the tops for the year, we did not have enough elements to think the turn was right upon us as the price action and its fractal nature did not have the makings of a complete bullish impulse.
We are now starting to have some elements. Purists will realize we made the tops last week with only divergence on a 30-minute and 60-minute interval charts, which is historically only indicative of a short-term retracement. As can be seen on the 60-minute chart we had slight divergence on the 11th and we have been consolidating since in a wave 4. It is not clear whether wave 4 is completed just yet. Watch 1,095.50 for now. As long as this level is not violated we may be in the last leg up of the impulse started at 1,026, but if it violated expect a pull back towards 1,082/1,084 before we make new highs.
Picking out the top here might be tricky, standard extensions for the last move up range from 1,013 to 1,029 in the SPZ9 future. We will monitor closely the structure of the price action in order to refine the level we see for the possible top as I expect a subsequent sell-off of at least 50 tics once this last leg is complete. In fact I expect we will retest at least 1,033. It is very interesting to note that on the daily chart we have divergence in RSI, and very pronounced divergence on the MACD. As long as the pattern is not violated we should still expect a sizeable retracement down to 943 or 875 down the road.
On a separate note the Dax has violated the resistance I was observing, and I would watch closely weather we close above 5,762 or how we trade tomorrow as if today is confirmed we would go challenge the highs which would in turn imply the top in S&P will be closer to the higher end of the range mentioned hereabove.
Good luck trading,
Nic
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Thanks for sharing your work with us, Nic.
1100 on sp500
We're paying particular attention today to the real bodies of the ESZ09 on the 89 minute (holding above the 11 handle) and the 514229 (Fibo) share, which we have found to be one of the most instructive and leading interval periods of time, tick or volume across the S&P futures.
514229 share at 09:44 is c. 345K deep right now so just past halfway there as it busts out higher over 1102 and tries to form a buy signal, not there yet but our oscillators have in fact reset after the minuette wave iv pause this morning, so 1121 is not out of the question but certainly not this morning, if at all. GC & SI were treading water after having met their first targets some hours ago as the dollar marks time traversing 75; ought be an explosive few days in anti-dollar land.
Thanks for sharing your analysis :-).
However concerning the DAX I have to disagree. The DAX is only a small gambling table aside of the great casino located in the united states. Major moves happen around 03:00 pm central european time, when the stock markets in the US wake up.
Look at the chart for today: a move of 0.5 % around 03:00 pm central european time on no news. This behaviour can be observed quite frequently.
Greetings from Germany ;)
Well today the US-cavalry was a bit late: they saved the DAX from plunging around 15:30.
Nic, I commend you on looking at this "situation" as if it were a real market with real buy and sell signals.
Unfortunately, IMHO, the US market is nothing more than a propaganda tool used to get the sheeple to believe that everything is going to be alright and it will act accordingly until it achieves its goal and everyone is spending beyond their means and racking up debt.
Sell offs will come, but they are only added for theatrical effect.
Until something breaks, as in systemic destruction, the only thing this "market" will do is go higher. Especially into year end.
Exactly how I am reading it, no way will this market fall during peak consumer season, I think this is why we are looking at a serious melt up rally at least until mid December, once the most possible has been squeezed out of the consumer they may choose to let it fall in the last few weeks into Christmas while attention is elsewhere.
Bingo.
So much for that. New highs, boom.
"the top in S&P will be closer to the higher end of the range mentioned hereabove."
Except I don't see a "higher end of the range" mentioned here?
What did I miss?
I think the range is defined by the diagonal lines drawn on the 2nd chart in the post. Seems the top end of the range is ~ 1200 on the SP.
"Purists will realize we made the tops last week"
Don't you mean dumb-dumbs will think we're near tops...
"Ben, hold interest rates at 0 for as long as you can and they'll have no choice but to invest in equities."
Ha - Keep shorting fools!
Many of my major large caps never had a losing quarter and yet are 11-15x next years (conservative) estimates. Why would you short here? Sentiment was killed in '08 and fear became massive. Rally will last through next year... and likely resume a bullish equities cycle. Last 10-yrs were flat (before divs), next 10 will recover as focus move back from commodities/EM to technology, energy tech, bio tech.
Sometime in the 5-10yr window, if we bubble, then get short. But you dont get to "call subprime in 1995" and then claim you were right in 2009. Early = Wrong.
I agree with Dixie.
Any move on the basis of bad news (unemployment) seems to start a corrective move that is immediately reversed and the market rockets up. Today's figures (big downward revision of September's retail figures, October's slightly better than expected - surprise surprise), Empire State Manufacturing General Business Conditions Index down 11 Points To 23.5 In October and what happens? The FTSE and the Dow have today reached new year highs.
All they're doing is inversely tracking the dollar index, which incidentally has broken below 75.
This is going to break down big time, soon.
DavidC
I like these comments,moreover after 30 years as a mathematician and physist working in a laboratory.
They make a living with this ?
this is called analysis? is it even worth spending your time to write this and my time to read this? just because of 10 stinking points on SP? if it breaks 1095 then watch 1085 before we go to new highs?
It's high-level drivel.
Here's what we know: The market is currently in an uptrend.
Here's what we don't know: When the trend will break.
Oh come on, just tell us how much you have lost shorting this market so far Nic. Seriously.
BTW, I have one question for all the "wave-people" out there - will there still be "elliot waves" in the stock "market" if the Fed is the ONLY buyer? Yeah, thought so.
Sure there will. It will be called the "Bernanke Wave." Analysts of this wave will refer to themselves as "economists."
Better than "Bernanke Wave" it should be called "Tidal Wave". 2 wave theory, first you get never ending liquidity, afterwards it dries up and you lie flat on your back.
Hi Nic, I think you analysis as Elliot Wave theorist is perfect. EWT could be proved as a good tool or not in the next 48 hours in my opinion. Tomorrow is a turn date according to fibonacci analysis ;-)
cheers
AG