S&P500

Update wednesday 24 apr 2018: Recently formed pattern has become invalid
  

Last time I wrote about the doji near the 61,8% Fibonacci level, which acted as a warning sign for a top. In the daily chart at the left you can see that a top has actually developed. Yesterday the dotted line at 2627 was broken to the downside. The market fell as yields on benchmark government bonds climbed above 3% for the first time since 2014 and this changed the technical situation. The inverse head and shoulders pattern I told you about on wednesday 18 april has become invalid.  In the daily chart on the right I have drawn new Fibonacci lines. The 61,8% level at 2616 is a potential support level. If it is broken at the close a return to 2554 or 2533 is the probable future development. As long as the S&P500 remains above the 61,8% Fibonacci level however a new upsurge is possible. -Ad Nooten- PS You can click on a chart for a larger version.

Update Thursday 19 apr 2018: Candle is a warning for a top
 

Opening and close were very close together yesterday, this resulted in a candle that is called a doji. It is a sign that the market wasn't able to choose a direction. A doji has implications as a reverse signal, it is a warning for a top. The session ended slightly above the 61,6% Fibonacci level, but that hasn't been broken in a convincing way. It is therefore imaginable that a top is formed in the S&P500 index today. The highest level reached yesterday was 2718. If the index rises above this level and remains above it the doji has no value anymore as a warning signal for a potential top and the 61,8% level is broken. That would be a positive step, as well as a continuation signal. For the time being however there is a considerable chance of a decline. -Ad Nooten-

Update Wednesday 18 apr 2018: Risen to 61,8% Fibonacci retracement level
 

Yesterday I wrote about the rising wedge in the daily chart. While the inverse head and shoulders pattern in the hourly chart signaled a rise, the wedge was an indication for a decline. The signals were therefore mixed. Eventually the market chose for a rise, that is why I have removed the wedge from the chart. The only pattern left now is the inverse head and shoulders pattern. The head and shoulders are indicated with the letters H and S. This bottom formation is valid as long as the S&P500 closes above the neckline 2672. The indicated target is 2790. In order for the S&P500 to go to this target the 61,8% Fibanacci level at aproximately 2710 needs te be broken. The S&P500 has to close above this retracement level. It is however a potential resistance level, where theoretically a top can be developed. For that reason we need to check weather it is broken today. The development of a top would be a weak output. -Ad Nooten-

Update Tuesday 17 apr 2018: Wedges and a head and shoulders pattern
  

In the hourly chart on the left you can see that the falling wedge has been completed by a break out in the same direction that the S&P500 was moving prior to the formation of the wedge. This pattern is an indication for a rise. The inverse head and shoulders formation in the same chart has subsequently been completed because of the rise above the dotted line 2672. The target now is 2790. For the pattern and the target to remain valid the S&P500 needs to stay above 2672. There is a complication however. The daily chart on the right shows us the rising wedge a-a'. This pattern signals a continuation of the downtrend that was there prior to the formation of this particular wedge. In order to go to the target 2790 the S&P500 needs to break out to the upside of this rising wedge. A break out to the downside would be negative and imply a fall instead of the rise that is signaled by the patterns in the hourly chart. -Ad Nooten-  PS You can click on a chart for a larger version.

Update Saturday 14 apr 2018: Falling wedge developing itself
 

The potential inverse head and shouders pattern has not been completed, because the dotted line at 2672 has only been broken temporarily. There is however still a possibility that the S&P500 will rise, because there is a falling wedge in the chart. It consists of two converging lines, constructed from a couple of peaks and troughs. The falling wedge usually represents a temporary interuption of a rising trend. If the stock market index breaks out to the upside and subsequently breaks throug 2672 the inverse head and shoulders pattern is completed as yet. -Ad Nooten-

Update Friday 13 apr 2018: Interesting situation in the hourly chart
 

The current situation in the hourly chart is interesting. There is a potential inverse head and shoulders pattern in the chart. The potential shoulders and head are marked with dots. This pattern would be finished when the dotted line at 2672 is broken to the upside. The dotted line would become the neckline of this bottom formation, the subsequent target for the S&P500 would be 2790. Now the market has this chance to form a bottom formation a move to the downside would be negative. It could mean a resumption of the decline of the S&P500. -Ad Nooten- PS Please click on the chart for a bigger version.

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