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Technical Analysis

US Stock Markets - Important Seasonal High Nearby

by Antonis Benis, on Sep 1, 2020 3:41:00 PM

The stock markets have risen relentlessly higher since March, driven by the FANGs and tech stocks. S&P’s forward P/E ratio (27) has reached levels last seen at the highs of the dot com bubble, i.e. very expensive. At the same time, we are approaching a seasonal high, related with the US elections, that calls for a rolling top starting this week followed by a correction into October – November (see chart 1, presidential election cycle).

 

seasonax seasonal trading cycle related to US elections.Courtesy of Seasonax


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  • TD weekly sequential 9 sell setup will be complete this week
  • Exhaustion alerts in Nasdaq 100 and S&P 500 in the last few days. APPLE had a 4 for 1 split yesterday, in previous 4 splits it topped within a week. Momentum and sentiment indicators at extremes, excessive/record high speculation by small traders, typically seen at important tops.
  • Advance/Decline line topped on August 12th, showing strong divergence to S&P now; i.e. not confirming the new highs (see chart 2)

NYSE Advance- Decline

Courtesy of Sentimentrader


GANN Analysis

S&P (spot) resistance at 3578/3620, more confident with this one; for Nasdaq 100 (fut.) 12237/12360 and the 3x3 c Gann angle, may get exceeded (see charts 3,4,5)

S&P 500 Index weekly

S&P 500 Index daily

Nasdaq 100 GANN Analysis


Conclusion

An important, if not major, top must be nearby; it should take place later this week or early next week at the latest (September 7th is labor day) and maybe mark the high for the year.

Investors are advised to take some money off the table, the gains have been tremendous. Traders should be looking for shorting opportunities; risk and time window are well defined.

*Note: This trading signals update was reported on September 1, 2020.


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Topic:Trading SignalsAsset AllocationActive TradingS&P 500Gann AngleAnalysis and StrategyNYSERecessionDaily Trading UpdateShort SellingTechnical Analysis
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