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Strategies & Market Trends : Point and Figure Charting
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To: Underexposed who wrote (32712)1/29/2020 2:23:40 PM
From: Underexposed5 Recommendations

Recommended By
AdvocatusDiaboli
Lou Weed
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rdkflorida2
WalterWhite

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I thought it appropriate to update my TA on the SPX

Just to remind you of my previous conclusions in previous post on the state of the $SPX

You see some pretty strong supports - a horizontal Plus diagonal support which combined make this a tough barrier to pass.....IF THIS SUPPORT IS BREACHED...well it would not be good
Well my prediction back then have been borne out this week...here are 2 charts



In the P&F chart, I pointed to the diagonal support combining with the horizontal support to form a rather strong support and lo and behold that support proved to be the strong support That I saw...You can see the share price enter that horizontal band which by itself was probably not that strong but it was the diagonal support that turned the direction of the $SPX


You can see in the notes above the chart that this chart is still considered bullish with a target of 3530. Personally I hold that with a grain of salt.... it has that resistance at 3330 to deal with first before we think of higher heights

In my Trigger chart I pointed out

This share price is showing it is in Consolidation...not a plummet.... when a stock is in consolidation it migrates to the 20daySMA (dotted green line)... from there it will tend to oscillate around that 20daySMA.The result of the consolidation period may be a further fall but it is premature to suggest a major decline at this point.
That is exactly what happened this week... in the upper circle the share value overshot the 20day average (dotted green line) and now has returned to slightly above that 20daySMA. You can see the Upper Bollie has flattened out...it will probably start curling downward soon and the Lower Bollie is climbing upward.... The next major movement will occur in the next Bollie Squeeze.


When would that happen? In the circle below the BBWidth is falling more rapidly now. I would say that will occur when the BBWidth is around 3.

As I pointed out in the quote from the previous quote, we still don't know whether the negative drift to the $SPX is 100% over.... anything can happen in a consolidation period.

What I would look for is the direction of the Slow Sto and MACD as the Bollies tighten. You want them to reverse direction and go positive again. Right now their slopes are less steep but no guarantees yet. IF they continue negative and the BBWidth strongly reverses direction then the plunge will continue

Conclusion

My conclusion this time is not much different from the last time I did this

I don't doubt that profit taking will drive a significant correction. How dramatic this would be remains to be seen. I doubt this is nothing more than a long awaited correction....not a financial meltdown. Many would look at this situation to add to their holdings at a lower price. I might do so but it would be based on an analysis of individual stocks...not a general practice.
It has been a minor correction so far....minor for the $SPX but some stocks have tumbled badly by comparison. A lot depends on the this coronavirus. We are seeing it now seriously affecting world commerce across the board....tourism, manufacturing, delivery of goods and services. But we have seen things like this before and survived it fine.

It reminds me of a cartoon I saw recently



The Sky is Falling has been predicted with every dip by many.... Me, I take it one dip at a time... evaluate it and move where it tells me to go.

UE
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