Author Archives: Strawberry Blonde

2016 Market Wrap-Up: S&P 500 Index, SPX:VIX Ratio & USD

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This post will outline how the S&P 500 Index and the SPX:VIX Ratio performed throughout 2016 and how they ended the year. It will also take a look at where the US Dollar Futures Index finished up.

S&P 500 Index

The following four charts of the S&P 500 Index will depict how 2016 ended, on a yearly, quarterly, monthly, and weekly basis.

Each candle on Chart #1 represents a period of one year.

After breaking out to all-time highs and above major resistance, the 2016 candle closed near its high, after re-testing last year’s low and the close and open of the 2013 and 2014 candles, respectively. It would appear that, after shaking out short-sellers, the bulls are firmly in control of upward momentum. We’ll see if the Momentum indicator makes a new high on the 2017 candle…a distinct possibility, if price can remain above major support at 2100. If price drops to that level, we’ll see a rise in volatility, and, if price drops and holds below that level, volatility will rise drastically.

Chart #1 SPX Yearly

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EUR/USD Nearing Critical Support

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As the EUR/USD Forex pair continues its rather steep decent during the past couple of months, it is approaching a critical major support level around 1.04, as shown on the Weekly chart below.

Not only will a drop to that level form a potential triple bottom pattern, it will also hit a triple confluence of long-term price, trendline and regression channel “mean” major support.

A drop and hold below 1.04 could see a catastrophic price plunge to levels (0.8827) not seen since October 2000. We may, however, see price overshoot and drop below 1.04 briefly, before a potential bounce occurs.

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Market Forecast for 2017: SPX at 2400 by End of Year

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On November 26th, I posted an article which outlined a hypothetical scenario of the S&P 500 Index reaching 2700 by the next U.S. Presidential election in November 2020.

I realize that this is only one of many possibilities that lie ahead for the SPX. However, given the aggressive economic, tax and fiscal agenda that President-elect Trump is currently promoting, it could, very well, materialize without too much resistance.

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SPX Outlook to 2020 U.S. Presidential Election

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I’ve written about the SPX:VIX ratio many times in the past. I’ve mentioned, as recently as November 13th, that it will be necessary for the bulls to hold price on this ratio above the 150 level in order for SPX equities to continue their rally with little volatility to impede this rise.

This post will take a look at one possible scenario that could see the SPX reaching a price of 2700, or so, by 2019, in anticipation of the next U.S. Presidential election in 2020.

As shown on the Monthly chart of the SPX below, price has rallied this month from the “median” of a long-term regression channel (which begins at the lows of 2009), and has broken out to all-time highs (above an almost two-year consolidation/congestion level) since Donald Trump was elected as President on December 8th.

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The Plight of the World Market Index

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As can be seen on the following Daily chart of the World Market Index, price has fallen below both the 50 and 200 MAs and is, once again, nearing a critical major support level of 1600.

Even though price is trading under the bullish influences of a moving average Golden Cross, all three technical indicators are hinting of further weakness to come.

Watch for a bullish cross-over of the MACD and PMO indicators, as well as a price reversal and bounce, break and hold, firstly, above 1700, then above 1750, as a potential signal of clear support of higher prices for world equities, in the longer term, including that of the SPX. Conversely, a break and hold below 1600 could very well forecast a large downdraft for all world equities in the near term.