S&P 500 (SPY) Headed Towards Key Resistance

$SPY

US stocks traded sharply higher Thursday, tracking the gains seen across the European markets after the ECB President Mario Draghi delivered a Dovish message at his press conference after the ECB meeting.

The long and short of it is that the ECB’s bond buying stimulus package could be strengthened at the Bank’s December meeting, interest rates could be cut to negative.

Unsurprisingly, the Euro tanked Thursday, while the higher-yielding currencies and stocks have rallied across the board, with the risk-on sentiment.

The focus of US investors turn to earnings.

This earnings season has not been great so far, but not so bad either. Positive surprises should give the Bulls confidence to expand into the overhead resistance marks.

That said, the S&P is approaching a Key resistance area around 2060 to 2072, so further sharp gains may be hard to mark until and unless the Bulls reclaim this area.

This is where a Bearish Gartley comes into play.

This pattern is derived from the convergence of some Key Fibo marks, and an AB=CD move.

On the chart below, the 78.6% Fibo retracement mark of the move lower from the record high i.e. the XA swing meets the 127.2% Fibo extension of the last notable downswing from point B to C in a close-enough proximity.

Also, the point D of the AB=CD pattern and the 200-Day MA stands within this 2060 to 2072 range, making it a Key technical (resistance) area.

So, if the stock markets have already topped, they ‘should’ turn lower from around these marks.

This also means that if the sellers fail to show up here in a meaningful way, then the S&P could easily re-test and potentially pass its previous record high, and thus maintain its long-term Bullish trend for another year.

As I write this report the S&P 500 mini Dec 15 is at 2,055.50 +2.50 2,054.25 2,061.75 2,053.25 04:31:22

Outlook: Neutral

 Technical analysis is a method of forecasting price movements by looking at purely market-generated data. Price data from a particular market is most commonly the type of information analyzed by a technical trader

Stay tuned…

HeffX-LTN

Paul Ebeling