SPX has reversed precisely at the upper boundary of the channel. Our old friend W.D. Gann was correct again: Markets make important highs or lows around 5-6 January. The FED played the catalyst.
Geometry:
The channel fibs can provide guidance for potential support levels (green arrows):
38.2% above the median at 4700
Median at 4640
38.2% below the median at 4550
Lower boundary at 4442
Elliott:
The bullish wave count remains, theoretically, valid unless price continues to fall below the channel median.
Moving Averages:
The important 20 week MA is located at 4580, the same level as the 78.6% retracement.
Oscillators:
The MACD is about to make a bearish crossover.
Correlations:
Despite rising yields the DXY has not broken resistance so far. DXY appears to be setting up for the next impulse wave, up or down.
Narrative:
Higher rates means that money becomes expensive again. Companies with high debt ratios will need to pay more interest to re-finance themselves. That means their margins will shrink, so investors will re-price these assets accordingly. Capital flows into value stocks. Indices are choppy during sector rotations.
How to trade it:
It is reasonable to expect a reaction rally after yesterday’s 2% drop, which bears might want to sell. An idea could be to test long positions if SPX reacts to potential support levels (green arrows). We need to observe if bullish reflexes still work.
Geometry:
The channel fibs can provide guidance for potential support levels (green arrows):
38.2% above the median at 4700
Median at 4640
38.2% below the median at 4550
Lower boundary at 4442
Elliott:
The bullish wave count remains, theoretically, valid unless price continues to fall below the channel median.
Moving Averages:
The important 20 week MA is located at 4580, the same level as the 78.6% retracement.
Oscillators:
The MACD is about to make a bearish crossover.
Correlations:
Despite rising yields the DXY has not broken resistance so far. DXY appears to be setting up for the next impulse wave, up or down.
Narrative:
Higher rates means that money becomes expensive again. Companies with high debt ratios will need to pay more interest to re-finance themselves. That means their margins will shrink, so investors will re-price these assets accordingly. Capital flows into value stocks. Indices are choppy during sector rotations.
How to trade it:
It is reasonable to expect a reaction rally after yesterday’s 2% drop, which bears might want to sell. An idea could be to test long positions if SPX reacts to potential support levels (green arrows). We need to observe if bullish reflexes still work.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.