The S&P500 monthly chart is forming a Doji so far, indicating doubt/indecision. The last two times it formed a Doji in the monthly chart, a sell off of at least 5% followed. March ain’t over, and a lot can happen in 2 weeks, but so far, March does not look that strong and the trend seems to get exhausted.
Bears are ready to take over, only question that I have is: will they take over this week or is a Higher High > 2400 first needed to shake out the remaining shorts? And only then, a corrective wave will start…wish I knew. I do think that risk:return over the next couple of weeks/months is in favor of bearish positions.
Check out the Rounding Topping Pattern, currently in progress on the Daily Chart of the S&P500.
Cycles (70 and 140 day) and Bradley (March 20) are signalling the S&P500 is close to forming a significant High and a corrective wave of 5-10% is likely to happen over the next couple of weeks to months into April – June. After that dip, I expect Higher Highs > 2500 for the flight into private assets and out of public assets. In my view, the real bubble isn’t the stock market this time, it’s the government bond market (record low rates). So money out of bonds, into equities for the next couple of years.
S&P500 Weekly Chart
Last week it formed a Hanging Man, and this week it was consolidating between the trend lines. Could go either way based on the weekly chart.
Support @ 2380 (trendline) and 2350-65 (horzizontal support). Resistance 2388-92 and 2400.
Keep an eye on the 2380, a break below and it could go fast, and furious, as this is major weekly support from trendlines.
S&P500 Daily Chart – Elliott Wave scenario analysis. The problem with Elliott Wave is always that there are two many ways to label a wave count, leading to conflicting scenario’s.
A break > 2400 —> 2450 seems next for end of March, early April. Orange scenario.
A break < 2360 —> 2300 becomes the next 1st target. Black scenario.
Early April is based on the next major cycle date (APR 4).
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Dow Jones Industrial formed a Lower High. Now I would like to see a new Sell confirmed by the Trend indicator. Confirmed when? If the close is < 20.800, a new medium term sell signal is triggered.
That’s my medium term strategy in a nutshell: wait for a Lower High and confirmation by SuperTrend new Sell. Or wait for a 1st Higher Low after a downtrend and confirmation by a new Buy signal of the SuperTrend indicator.
My short term strategy is to play the daily candle stick patterns (hammers, shooting stars, engulfing etc) for a quick ride up or down. You can follow my short term trades here: PatternTrader11.
Coca Cola formed a Lower High and is close to a new Medium Term Sell signal.
Pepsico formed a Higher High, but the candle sticks (Hanging Man 2x) indicate that the uptrend is getting exhausted, early warning. A break < 110.6 and it turned out t be a fake break out. So keep an eye on the 110.6.
McDonalds tried to break the 130, but for now it failed, forming a bearish candle stick, a shooting star.
Nike is forming two potentially bullish patterns: a flag and an inverted shoulder-head-shoulder.
A break > 58 opens the door to at least 1st target 60. A break below 57.3 and the 1st target becomes 56.
Pay attention: Nike, Inc. is expected to report earnings on 03/21/2017 after market close. The report will be for the fiscal Quarter ending Feb 2017. According to Zacks Investment Research, based on 17 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.52. The reported EPS for the same quarter last year was $0.55.
VIX forms a Rounding Bottom Pattern, bullish, click here, and last Friday, it formed a hammer candle stick, a short term bullish candle stick.
Medium term: SuperTrend on a Long signal > 10.8 since end of February. Did not pay off yet. New sell if close < 10.8.
Facebook still trending inside the rising wedge, a bearish topping pattern. Getting narrow at the top and should lead to an explosive move next.
Short term, Facebook formed a Bearish Engulfing (Higher open, Lower close vs previous day). A break < 139 and there’s a break out of the wedge. Not there yet. For the medium term, the SuperTrend is still positive > 138, new medium term sell signal if close < 138.
Apple formed a Higher High in the form of a doji (doubt) followed by a Bearish Candlestick pattern: a Bearish Engulfing. Short term bearish pattern within an uptrend –> showing early warning signals for long positions.
Medium term: SuperTrend stays Long > 138.4 & New Short if close < 138.4.
The DAX is forming a Cup and Handle Pattern, bearish for the short term but very bullish for the long term once the 12.400 breaks to the upside. For now, I still think that selling the 12.100-400 area for a 1st target of 11.300 is the right strategy. Short term: sell the highs < 12.400. Long term: buy the dip >10.700.
For more info on the DAX Cup and Handle, click here.
Volkswagen – short term, it formed a hammer, bullish candle stick, but medium term, Volkswagen formed a new Sell signal last Friday in the SuperTrend after a Lower High.
My plan is to play a long position for the short term, based on the hammer candle stick. But I will sell any upside for the medium term as long as the close is < 144.
Adidas – gapped up, formed a shooting star (bearish) but did not follow through with downside yet, consolidated at gap up level.
Medium term still in uptrend > 175.
Summarized: I’m bearish for the next couple of weeks/months into June, but bullish on stocks for the long term (years).
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The following documentary shows 3 Cycles of Time that have a direct impact on our lives and investment decisions:
- Global Warming and the next Ice Age to come. CO2 will be reduced significantly, same as every cycle has happened so far.
- The bond market will collapse, interest rates will go up and stocks will boom.
- The cycle of wars, approaching the climax near 2020.
Although I saw this documentary for the 1st time today, it perfectly aligns with my view on how we should invest for the next couple of years:
Check out the Documentary here: Documentary “Missing Links – The Cycles of Time”