The US-markets have reached…are nearing a major point in TIME and PRICE. Within a few weeks we at least may expect some fireworks. What will it be, up or down? Below I will explain the current technical situation of SP500 and Nasdaq.
First I like to share that we are living in challenging times with a world of terror, crises everywhere in countries as Brazil and a very weak bankingsystem (Italy) in Europe. Besides yields are around 0 or even negative. We live in a deflationary environment in the big region’s, US, Asia and Europe. They (central banks) all have the gates wide open creating money in an effort to stimulate economy. Recent examples are Japan and UK.
From a historical point of view deflation always lead to lower stockmarkets but will this be the case again?
The bulls, and they have their point, would say; Well, the world is changing in a big way, so economic growth is coming and fast as the energysector is turning in using electricity in stead of oil, solar and windenergy. This creates a boom in renewing transports like cars. Selflearning software/intelligence would change our life in a big way etc. Are the low yields pulling investors in stockmarkets in an effort to make positive returns? Why not!
We stick to the FACTS as technical analysis involves all the news..in PRICES! We also consider TIME in our analysis which results in a preferred scenario. Besides my work as analyst (Gann) I use Harmonics (Fibonacci) and build the most preferred scenario to watch.
I also will visit the old school of thinking about Dow-theory, where Transportation and Industrials have to confirm each other. In other words; transportation has to lead industrials up and down at turningpoints. When transportation has a lower top compared with industrials then consider this as a warning that economy is turning down and vice versa.
Last years, with the digital revolution as internet (transports) I use the Nasdaq in stead of Transportations as confirming index for DowTheory. I also use SP500 in stead of Dow Jones Industrials.
So far the background of thinking.
Let’s first focus on SP500:
- TIME: Focus on a double hit the 11th and 15th of August, a week leeway possible, earlier or later as cycles could be left-or righthandtranslated of original dates!
- PRICE: Focus on 2.205 ~2.210 as this zone is build from a major spiral and yearly referenceline.
- Harmonics: We have a Deep Crab Bearish on H4 confirming this pricezone.
Dow Theory: Did you know the Nasdaq is 16 points shy of her 16 -year old ALL TIME HIGH? Is Nasdaq making a very huge double TOP? S&P 500 is making new highs comparable with Nasdaq. Huh? Is Nasdaq lagging Industrials? Yeah, and in a very big way.
Conclusion DowTheory: Nasdaq is STILL not confirming industrials to have a bullish view on markets on large timeframe. We are warned for an important top!
Conclusion: Watch carefully what happens in coming weeks as this could be a very significant point in time and price for markets. Harmonics do have a bearish setup on H4, not on weekly basis, so a correction downwards is not necessarily the start of a huge bearmarket. It could also be another setup for a boost to higher highs later this year. Only TIME will tell in the future if the bears win or not.
So far we have a nice confirmed (Gann and Fibonacci) setup for at least a bearish scenario coming up soon when the pricezone Harmonics is hit and completed.
Be careful and happy trading coming weeks.
Have a great weekend, Marketwizard1
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