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SPX Weekly analyses, Aug 3, 2019

Updated: Sep 26, 2019

Instead of weekly video

Weekly, daily and 240 min charts of SPX cash index and SPX CFD charts

No. 1 Weekly SPX Index chart

Possibility of having yet another false breakout above previous ATHs. Market disappointed by FOMC Press Conference and Powell and later with Trump tweets about US-China trade talks. Strong red weekly candle, close near bottom.

No. 2 Daily SPX Index chart, with gaps

There is gap right above the price, and two at ATHs, but now we are interested in ones below the price. Several gaps below. Move from support field to the ATH did not made many support levels. Market profile traders can see signs of poor structure all the way up. Possible scenarios are:

1) this is a false breakdown, market goes swiftly back above with convincing move to the upside

2) this is a start of correction, market HOLDING below, moving lower – more on next pages

Recommend to watch Weekly video by Peter Reznichek. Bigger picture on SPX and market profile.

No. 3 Daily SPX CFD chart, with moving averages, especially DMA50

Unlike DAX, SPX does not respect DMA50 (blue on chart) much, at least in this period that is on chart, from Jan 2018

Start of previous 20% drop was false breakout, buyers tried to hold bottom edge of range AND DMA50 was there and failed, in October 2018. Now, we have a daily close on DMA50. Possible is to see some consolidation here before next decisive move.

No. 4 Daily SPX CFD chart, with false breakouts and comments inside

This was how previous correction started – false breakouts above prev. ATHs. Same can happen again.

Also – volume on the way up was pretty small, but on the way down – pretty big. Double the average. That is a warning sign for the bulls.

Friday low and trendline are next inflection points.

More about false breakouts and volume in the Chris Ciovacco video. Detailed SPX analyses there.

No. 5 - FINAL CHART - 240 min zoom on a SPX CFD chart, on second up leg

This is a zoom of a previous chart. Here we can see where selling stopped on Friday, Aug 2nd. Obvious Support zone AND 38.2 fib retrace of this second leg.

Conclusion: Upside movement left plenty of unfilled gaps, rally was build on a weak structure. Although that can last for plenty of time, once it collapse, it can go down faster than on the way up – just like we saw in October drop.

Prepare yourself for downside scenario, and learn more about false breakouts (upthrusts) – since breakout attempts tend to fail in bearish environment. Embrace the higher volatility – it brings more opportunities.

HAGW, StrayDog.


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