Is the S&P ready to topple over?

Published date: 26/02/2019

The S&P500 has been on a rapid rise since finding its bottom @ 2350 in late 2018. Since then, it has appreciated 19% in 40 days. This rise could soon be about to unfold as we approach some major levels. 

Fibbing the move from the highs of 2940 down to the lows of 2350, we have run into a cluster of resistance at 2800 - 2815. We find the 78.60% fib level, along with previous retracement highs of last years rapid move down. 

Taking a look at the price action of this year, we have been on an accelerated move higher, climbing from a low of 2350 to a high of the year at 2813. As you can see from the daily chart below, we have major resistance levels @ 2800 & 2815, along with a shooting star forming on yesterdays candle, off our 78.60% fib level, three strong confirmations already.

Looking at the chart from a technical perspective, we can see that our confirmations are pointing to the downside. However, a break and close above this major level of 2800, and this opens the door up to recent highs of 2875 and back to all-time highs of 2940. 

A lot of “good news” regarding the US & China Trade deal has already been bought into the market, Trump said yesterday that they are “very, very close” to signing a trade agreement. He also mentioned yesterday to the US governors that both nations “are going to have a signing summit”. Trump's tariffs were supposed to come into effect on the 1st of March, but this is being delayed following the “good news” he released yesterday. If the tariffs were to be reinstated however, this could certainly be a catalyst to move the market downwards, as they seem to pricing this out, something to keep an eye out for going forward.

In the scenario that Trump removes the old set of tariffs, we could see this whole set up invalidated and the S&P could target previous highs. We will need to see how generous the President is feeling?

Trump is also meeting North Korea’s leader Kim Jong-un in Vietnam this week to iron out nuclear weapons programme.

Following the news release yesterday, traders would expect a positive day for the S&P500, however, the Index finished negative for the day, albeit slightly. When good news cant keep a market supported, it may be time to worry.



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