S&P 500; Where Do We Go From Here?

Where does the S&P 500 go from here? Referencing the chart below we have seen a nice bounce recently from a minor consolidation zone from early 2017 which also coincides the with 25% fibonacci retracement level which measures the bottom in early 2009 to the recent top in late 2018. Volume accumulated in 2018 between 2607 and 2794 which we have broken below in late 2018, early 2019. This zone now becomes key resistance, most notably the bottom of the zone at 2607 to the middle of the zone (POC- Point Of Control) at 2703. This area is likely to reject price now should or when price moves back into the zone on this rally. A strong rejection here would favor a turn back lower targeting the High Volume area below at 2030-2107. This is the area where volume accumulated between late 2014 into early 2016. We have always believed that whatever rally we had above this zone, price would have to return and retest this zone at some time in the futures before heading back higher. Well, that time could be upon us very soon. We have a 75% probability factor that this zone will be reached some time in 2019 which would represent and approximate 25% further decline from current prices. This key support zone also coincides with the 38.2% fibonacci retracement level. Our secondary target is 1800 which would be reached should strong downside momentum force price below the 2030-2107 zone. This level coincides with the bottom of the High Volume area and the 50% fibonacci retracement level. Should this area hit, we would then favor a strong bounce back into and above the 2030-2107 which is still considered key support. We have a 50% probability factor of this level being reached. Either of these areas would be solid spots to initiate long-term investments. Our third level is at 1530-1560 which is more of a catastrophic level. It coincides with the double top from 2000 and 2007 highs and the 61.8% fibonacci retracement. We would only expect this level to hit should something catastrophic occur like in 2001 and 2008. That occurance is not something that can be forecasted of course, but the level still holds a 25% probability factor of hitting.

 

Chart_19-01-08_14-11-52

 

i10 Research subscribers can view our research and current portfolios by logging into the Client Research Center via the Client Login tab in the upper right corner of our website www.i10research.com.

To non-subscribers: Request more information about us, including trials, service and pricing options, by visiting our Contact Us page or by calling 646.535.0369.