Hello one and all, yup it’s my 50th today, yet I still feel like I’m 17 1/2 years old. My wife says I act like it
So, it’s been a while since my last market analysis. That’s because I’ve been very busy putting together a private investment fund, which I mentioned a while back. It’s the pilot fund in what we expect to be the first of many. The name of the fund is TradeSavant I LLC. The Roman numeral indicates that this is the first in a series of funds. If you would like more information, just give me a call. The plan is that future funds won’t be private.
Anyhoo… Now that the fund is underway and my calendar is cleared up, I will start providing regular market updates. I should note that much of my technical trading has been usurped by algorithmic trading… computer generated trades, completely hands off. I must admit that these systems are darn good traders, and no sweat off my back to boot! Just sit back and rake it in.
So on to the analysis!
As you can see from the above chart of the S&P 500 index the market appears to be stalling after a historic rise throughout September. It’s historic because September is typically the worst performing month ever since the US stock market came to being. This September we experienced the greatest gain in over 80 years!
The chart shows that the market is bumping up against strong resistance in the form of historical price at 1150. It is also the 61.8% Fibonacci retracement level off the recent April highs. Additionally we have negative divergences forming on the oscillators, and a bearish crossover on the MACD. Now all of this doesn’t mean the market is going straight down, it simply means there is downward pressure and the probability is that the next minor move is down.
The chart is showing a prototypical handle forming. This often happens before a breakout. But handles need momentum to breakout from resistance, and the way they do that is pull back, consolidate and take a running start. So that’s what appears to be happening here. The market will likely pull back to support at 1131, maybe even a little lower, who knows, and then garner some momentum before trying to break through that 1150 level.
So, let’s let the market unwind some before getting too bullish. Even if we get above 1150, the big breakout won’t happen until we clear 1160. If that happens there’s little stop this market from reaching for those April highs.
Tagged as: S&P 500
