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Technical Analysis

S&P 500 Update: Close to a Intermediate Degree Top

by Antonis Benis, on Dec 27, 2019 5:38:02 PM

This is a follow-up of my previous report on December 9th.

Stock markets are in a melt up  phase that is about to end and change direction. The Advance/Decline line is still holding strong, not showing any divergence yet, while the “Smart/Dump money confidence spread” is at extreme levels not seen for, at least, the last 10 years. The latter signals concerns for the short to medium term, returns are very poor following such readings (see charts 1,2)

NYSE Advance_Decline LineCourtesy of sentimentrader.com
 

Smart Money _ Dumb Money Confidence Spread-2

Courtesy of sentimentrader.com


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SPX has completed a TD weekly sequential sell setup on December 20th; seasonality is supportive until the first trading days of January.

Cycles for the S&P 500 suggest a top around now, followed by a decline into the first week of February, a rally into March and renewed weakness into April (see chart 3, with added dates).

S&P 500

Please notice, this is weekly chart created with “classic Spectrum”; it is not supposed/expected to work exactly, just to give you a general idea for the weeks and months ahead.

Gann analysis: Resistance at 3271/3283, ideally in the first week of January, we are almost there! (see charts 4,5). Longer term target remains 3600, I still believe it will be reached in 2021.

 GANN - S&P FUTURES

GANN - S&P FUTURES

Bottom line: A very important top is expected in the next few trading days, upside potential about 1%. Investors are advised to take some (if not all) money off the table; traders should look for and take sell signals. I do expect a decline of 10+%!

 

Until next year, wishing you an enjoyable and prosperous 2020.


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Topic:Trading SignalsAsset AllocationActive TradingInvestment StrategyS&P 500DiversificationGann AngleAnalysis and StrategyFundamental Analysis
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