2019 S&P Outlook

Earlier this year (2018) I calculated the February low would be the low for the year. However with all the political turmoil and social agitation, (trade wars, interest rate rise and whatnot) put that view in jeopardy!  If we’re fortunate and by some miracle we get the trade war squared away, and the Federal Reserve holds rates steady, the S&P 500 index might just keep from falling below the February low before the end of 2018! However, I hold little hope of that happening!

Using the same calculations as in the past I have a target high of $2975 for the S&P 500 index in 2019.  In other words, it’s very likely we’ll see a retest of the Sept./Oct. 2018 high sometime in 2019, if everything I use to calculate targets remains the same. If by chance some of the fundamentals change then I’ll need to recalculate the target. But as of this writing (12-05-18), I’m looking for a retest of the previous 2018 high at some point in 2019!

Should the 2018 February low hold the probability we’ll see a sideways trending index in 2019 increases! If February's low doesn't hold then 2350 is what I calculate as the low for 2019!

Some key support levels to watch on further down moves are:

2629 to 2603 = 90 week moving average and pivot support level.

2532 = February Low.

2516/2511 = Fib 23.6% retrace and confluence area. Should see strong support about this level!

2379 = Fib 50% retrace of 2016 low to 2018 high. Should the index drop to this level I suspect this area will hold. I really don’t expect the index to fall this far but it really all depends on how events play out in 2019.

Analyzing the 4 stochastic lines in the weekly chart!

Black line: The black line is the fastest setting. It’s oversold currently, suggesting we should see advances soon probably within the next two weeks. That’s encouraging if short term bullish!

The black line just crossed above the red signal line but still remains below the blue intermediate weekly line.

Confidence for the long term? 

We’ll see advances held in check until the black line makes the simple crossover above the blue. As it stands now we’re likely to see some advances in the next two or three weeks, but need to hold off  longer term optimism till after the crossover, if and when that happens!

Troubling for the longer term is the thicker slower stochastic orange line setting. It really doesn’t look good at this writing! It suggests the index has the potential of dropping over the next few months out with counter trend advances. Should that scenario occur it would be best to sell rallies until such time it turns in a more northerly direction!

To recap:

The probability of seeing the index trending sideways in 2019 is high.

However the downside is favored for now, to a few months out, with short term counter trend advances.

copyright © 2018 ridingthetrend.com  All rights reserved.

December 2018

uploaded Dec 2, 2018

Taking a look at the S&P 500 index for the shorter term here

The index found support at just below the 2650 level, and advanced last week. The greatest factor for the support and bounce came from what Fed Chair Powell said on Wednesday! The market took the words he said about rates being “just below neutral”, as the Fed is about to stop rising rates, which is a dramatic turnaround from what he stated last October!  Whether the Fed intended it that way is up for interpretation! Another rate increase is expected in Dec. What happens in 2019 regarding rates remains to be seen!  In any event his words on Wednesday served to bolster markets higher. Where we go from here is up for discussion today!

The chart on the right is a S&P 500 index daily chart going back to 2016.

Here are some significant points to consider. There’s that May 2016 to Feb 2018 uptrend line of importance! Last week the index penetrated above it. If this was a weak market that wouldn’t happen!  That line would have acted as resistance and dropped prices. However it’s really not that uncommon for levels to go just above or below support or resistance levels at times.  Favoring a stronger move higher view is the fact the price also penetrated above the shorter term orange resistance line.

Looking at some resistance levels on a further move higher.

There’s a Fib confluence around the 2776/2784 area, which are both a 50% and 38.2% level. That area might pose a problem for a continued advance, which I suspect the area will act as somewhat of a hindrance. Should the index manage to climb above 2788 then it’s likely to reach the early November high of 2815 for a retest and drop from there. Once the price moves to 2815 level becomes (1) a triple top, (2) a 61.8% fib level and (3) also a resistance pivot. The combinations of all three can act as strong resistance!

The indicator below the bar chart is a stochastic with three settings, fast (black line), intermediate (blue line) and slow setting (orange line).  What the stochastic black line is suggesting is we’re nearing a peak in the advance on a shorter term basis. It’s likely the advance will last a few more days. Probably till Tuesday is my guess!  The blue line crossed above the orange line last week! That hints we could see the index advance over a longer period. The orange stochastic line is below 50, which isn’t all that reassuring for the longer term! If and when the orange line moves above 50 a greater degree of confidence can be had for seeing advances.

As it stands now I’m looking for a few more days of advances then a pullback to anyone of the Fib levels and/or a uptrend support lines.

Here’s how I see it play out over the next few weeks.

Index advances to around 2788 pulls back a few days then moves back up to around the 2815 area to form a triple top and falls from there. Beyond that is a harder call to make! It would be encouraging if we see the orange stochastic line move above 50 and remain above 50 for a sustained period. That would mean the index is in a longer uptrend.

That’s it for now.

copyright © 2018 ridingthetrend.com  All rights reserved.

November

Uploaded November 24th

This is a short analysis of the S&P 500 index for the immediate future. 

Clearly, the average has broken below a long-term uptrend support line.

That portends less than desirable outcomes for long-term investors. However, traders can profit and gain from these intermediate swings.

The focus of this analysis is on the shorter term move.

In the very short term, I expect to see a bounce, suggested by the oversold full stochastic along with other oversold indicators!

As of this writing, the full stochastic oversold condition appears it would like rectification soon to a more bullish stance!  The crossover could happen in the not too distant future.   I’m looking for a bull signal crossover by midweek of next week, around the 27th or 28th.  However, it may be a one day wonder.  It’s unlikely we’ll see a sustained advance before mid-Dec.

Potential support levels on a continued drop are at the Oct low of 2603, the April low of 2553 and finally a full retest of the February low of 2532. I don’t expect the pullback to exceed the February 2018 low. However, should it continue then I’m looking for support at around the 2503 level.  

If the S&P 500 index finds support at around the 2603 level and bounces, resistance may be seen in the areas of 2664, 2702 and 2755 on an advance.  

I have a couple of days to watch as possible turn days (+/-1 day). They are  Nov. 28th and Dec. 14th.

copyright © 2018 ridingthetrend.com  All rights reserved.