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Mercury

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Possible but one thing that might be useful is some analysis on what sectors are driving the current rally.  This is something I have suggested to IG but no sign yet.  If the rally is driven by utilities, FMCG etc then these are more defensive and suggestive that the rally is not growth company driven and therefore is likely to stall.

 

Here is my take on the US markets (or at least the S&P).  My Monthly/Weekly analysis is unchanged so will start with the Daily.  My bias is for a new all time high (I'd like to see it so we can get it over with and focus on what happens next so bear that in mind).

 

On the Daily there are really only 2 scenarios left:

  1. A very odd looking wave 1 down to Feb 2016 now rising to an almost double top wave 2 leaving the all time high at May 2015.
  2. An A-B-C to Wave 4 at Feb 2016 now rising in 1-5 for a new all time high

For #1 the current turn down does support this this with Neg Mom Div at recent high but the EW count is difficult to make for an A-B-C from Feb 2016 and Stochastic is in over sold so we can expect a reaction soon

 

For #2 the EW count works much better and with price so close to all time highs one can easily see a new high.

 

Looking at the 4 hourly (similar picture on hourly) we can see a possible A-B-C (red) supporting a wave 2 O(purple) completion and turn down but this is a huge wave A so not a high probability in my opinion.  More likely is a 1-5 motive wave and in the final wave 5.

 

This being the case I would expect a retrace back up soon which will either be a 1-2 (blue) in A-B-C form followed by another fall which would confirm scenario 1 as the current move down fits a small 1-5.  Alternatively the retrace kicks on to fresh all time highs and completes the 1-5 up and then the drop begins.  Given where we are and the current pattern it seems likely that any fresh all time highs will not be extensive and other markets may not achieve them.

 

Given the lack of clarity at present I am awaiting developments from the sidelines and focusing elsewhere on better set ups.

 



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Using the S&P500 my long term chart (weekly) shows the possible path to a new all time high,  There is decent Neg Mom Div on all timeframes so we cannot rule out a Wave 2 (purple) peak and the beginning of a strong drop but so far there was a strong bounce off the rising supporting tramline on the weekly chart and the potential Wave 4 turn hit an alternative tramline pair.  The preceding pattern is a much better fit with an A-B-C retrace to 11 Feb 2016 low, which would suggest a Wave 4 rather than Wave 1 and the form of the strong rally to recent highs was more like a 1-2-3 of a 1-5, which suggests another leg up.

 

The 4 hourly is similar to that of the FTSE in that the move down may or may not yet be completed and another leg just below Friday's low could easily happen.  So I expect the early part of next week to remain volatile but sometime during the week we should see which scenario is playing out.

 



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So much for a Brexit induced stock market crash!  The FTSE is actually up 3% on the pre Brexit rally low (16 June) and the US large cap markets are in a potential turn back up.  Of course this IS a prelude to a crash but not because of Brexit and not just yet.

 

On the S&P hourly I see a small 1-5 forming in line with FTSE and DAx rallies.  I expect a small retrace before the final push back up.  Any Longs should be treated with extreme caution and I would not be minded to think about shorts until the US large caps show a clear turn down, which they have not yet in my book.

 

Anyone think the reverse?  Let us know the reasoning won't you?

 

 

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I'm anticipating a retrace drop off as we move closer to NFP on Friday followed by a turn into a wave 3 strong rally once the retrace concludes.  This has been a strong initial rally, which puts the whole Brexit thing into proportion (i.e. didn't make the slightest difference, the central banker coolade is still free flowing...).  With a medium term forecast of fresh all time highs Longs from after the NFP release, once the turn back up is established, are on the cards.  Next week is shaping up to be choppy at best with an overall downwards trend until the next big push up is started.

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US Stocks not particularly bullish after lackluster FOMC minutes, kicking the can down the road once again and saying they needed more jobs data after the May sharp reversal.  Will we get a drop towards NFP now and if NFP shows another poor data set in terms of jobs added them the chances of a USD rate hike must fall to zero.  This ought to herald a stock rally and USD drop (at least in the short term).

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We haven't had a post on US stocks for quite some time, I guess people are watching and waiting, I know I am.

 

I noticed something interesting on the Nasdaq recently, a double top that shows on several time frames.  This could be a Top out but at present I am dubious, it seems more like a retrace turning point to me but it may support my broader analysis of a significant retrace (relatively) prior to a final exhaustion rally to the Top on US stocks.  Other US indices are showing Triangle formations that could also be suggesting a retrace OR ending Triangle I suppose...  Whether it is now or a little later the US markets do appear to be faltering...

 

For me I think that stocks will retrace down further from here and then rally but will that rally be another leg higher or form a lower high that would confirm a Top out?

 



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S&P500 is in the process of breaking out of a Triangle formation to the downside, in line with the FTSE100 and the Nasdaq and Russell are coming up on similar critical points.  All points to a retrace prior to Jackson Hole utterances to me with a relief rally post this a likely nest move.

 

I have some tactical Shorts but will clear them all before the weekend and wait again in the long grass for NFP week.  Things are certainly brewing up in the melting pot, next few week could be very interesting indeed...

 



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