The important thing resistance stage I have been watching on the S&P 500 hasn’t wavered. It is 5782. The bulls had an actual likelihood this previous week to clear this essential hurdle and so they failed. Badly. If this was a heavyweight struggle, the ref would have known as it after the primary spherical. It merely wasn’t shut. Resistance failed, rotation turned bearish, volatility once more expanded, and the bears are celebrating one other short-term victory.
Try this S&P 500 chart:
I’ve written about this to EarningsBeats.com members. I posted this actual chart in my StockCharts.com article a couple of days in the past. I’ve mentioned it on my YouTube exhibits. 5782 is THE key short-term worth resistance and you’ll see above that the S&P 500 actually did an “about face” as quickly because it touched this resistance. Sellers have been lined up. Now that we have failed at 5782, it solely makes this resistance stage that rather more essential on any future rallies.
The intense technical harm occurred over the previous 3 days as client discretionary shares have been completely TROUNCED, whereas client staples hang close to its current highs. In the event you recall, it was this HUGE disparity in client shares on February twenty first that triggered the large promoting episode. Now right here we’re once more with client staples shares (XLP) outperforming discretionary (XLY) by a mile. Try this chart:
Does not the motion in client shares the previous 3 days precisely mirror the motion we noticed within the 2nd half of February and into the primary week of March? Of us, this is not good.
That is simply the tip of the iceberg.
Bear Market Forward?
The S&P 500, from its current all-time excessive to its subsequent low, fell 10.4%, which marks correction territory. The rally we noticed off the March thirteenth low was possible as a consequence of oversold situations, together with March choices expiration. On Tuesday, March 18th, we mentioned with our EB.com members that odds favored a short-term rally, primarily based on max ache and we laid out key resistance from 5670 to 5782, with the 20-day EMA falling in the midst of this worth vary. As soon as we failed at 5782, it was essential to gauge the character of any new selloff. That is what I have been evaluating this week, and it is not fairly. As you may see within the chart above, cash has as soon as once more began rotating into the XLP and out of the XLY. This is among the most essential intermarket relationships, and it is screaming BEARISH ACTION AHEAD!
It is just one sign, nonetheless. I introduced a couple of days in the past that we would be internet hosting a FREE webinar on Saturday morning, March twenty ninth, at 10:00am ET. I plan to debate a number of indicators which can be pointing to precisely what we noticed on Friday – extra promoting. To get a greater deal with on present market situations and the place we’re heading, I might encourage you to hitch me Saturday morning by REGISTERING HERE. If you cannot make the stay webinar, we’ll nonetheless ship out the recorded video to all who register, so ACT NOW!
And here is a bit secret. Shhhhhhh! Market makers are enjoying some critical video games manipulating among the largest shares. I will discuss a bit about how we will make the most of that Saturday morning. Hope to see you there!
Pleased buying and selling!
