The uptrend move from 12/24/2018 went from 2317 to 2819 (a gain of 502 points) on S&P futures March' 2019 contract and we mentioned multiple times in the past on this blog that we were targeting this move to reach 2809. S&P futures exceeded our target by a mere 10 points and started the weakness due to down trending medium term weekly cycles. So far the downtrend has corrected from 2819 to 2722 (a loss of 97 points) on March' 2019 contract. The key question is what happens next?
On positive side:
- So far, the pace of decline in this down trend move has not been very severe.
- Timing wise, the bottom scheduled for this medium term weekly cycle is not very far away. After this bottom, weekly cycle model is projecting higher highs in the medium term.
- On a weekly basis, S&P closed above the key weekly trend level of 2735.
- Daily chart is oversold and S&P responded to positive divergence on both hourly and 4-hourly charts and reversed on last friday along with close enough buy signal on daily charts.
On negative side:
- There is still little more time left for the medium term weekly cycle to bottom.
- The weekly engulfing red candle for last week is bearish.
- The very long term 4-yr cycle in US stock market hasn't bottomed.
- US economic data continue to show deterioration.
For next week, the key level to watch is 2735. We remain in buy mode above it and in sell mode below it. A close above daily trend level of 2763 would be bullish and mark the end of down trend. The view of short term hourly cycles is continued uptrend in early part of the week followed by weakness.
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| S&P Hourly Cyles - 03/08/2019 |
The COT report from last friday shows no change in expected trend for US Dollar Index by non-commercial traders. As per daily cycles (see below chart), this week will be a tale of two halves. There should be continued gains in the first part of the week followed by reversal.
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| US Dollar Daily Cycles - 03/10/2019 |