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March 19th, 2020: SP-500 Chart Update

Posted by pugsma on March 19, 2020

1:25 pm EST:   The SP-500 opened gap down from 2398, hit 2320, bounced to 2457, then has remained in a 2380 to 2432 range.

The 2281 low yesterday is the bottom for the Primary (green) count for the end of PC-C2 or the alternate (red) count PA-C2.

The  primary (green) wave is that the Cycle (C2) wave has been playing out as a 3-3-5 running flat since the September 2018 high at 2941 ended the Cycle 1 (C1) wave.  The 3-wave drop from 2941 to 2347 in December 2018 was a Primary A (PA) wave.  The 3-wave move up from 2347 to 3394 was a Primary B (PB) wave.   The Primary C (PC) 5-wave drop from 3394 to 2281, has been typical of PC wave of a Cycle degree flat in that it’s been very fast.  The major [1] of P1-C3 is underway with a target of 2597.  This primary (green) wave count remains valid above the 2281 low.

The alternate (blue) wave count is major [3]-PC-C2 ended at 2281, just above the typical major [3]=1.62[1] target at 2265.  This move up from 2281 is a major [4] wave that should retrace to the 23%/38% Fib at 2478/2606.  The major [4] wave remains valid below the major [1] low of 2856.  Once major [4] competes, there will be a final major [5] down toward the PC=2.0PA target at 2206 to PC=2.23PA target at 2069.  Note the 50% Fib retrace (of C1) is at 2031.

The less probable bearish alternate (red) wave count is a C1 wave that peaked in February 2020 at 3394 and a large C2 wave 5-3-5 Zig-Zag down to the 50%/62%/78% Fib (off C1 3394 high) at 2031/1703/1269.   The initial PA-C2 wave down is looking to completed at 2281.  The PB-C2 wave should be bounce up to a 50%/62% Fib at 2838/2971 (basis PA at 2281).   Following the PB bounce, there will be another massive PC-C2 wave lower that will break below 2347.  The PC=PA target is 1858 (right between the 50%/62% Fib targets of 2031/1703).  The alternate (red) wave count remains valid below 3394.

SP-500 15-min chart:

SP500 Technical Analysis

SP-500 60-min chart:

SP500 Technical Analysis

SP-500 4-hr chart:

SP500 Technical Analysis

SP-500 Daily Chart:

SP500 Technical Analysis

SP-500 Weekly Chart:

SP500 Technical Analysis

26 Responses to “March 19th, 2020: SP-500 Chart Update”

  1. pugsma said

    Ideally, we don’t want a big move up (short squeeze) into the close. We need base building here above 2281 and then a grind higher over days/weeks for the major [1]-P1-C3 wave to 2597.

  2. pugsma said

    2467 hit the top of the bullish falling wedge on the 15-min and 60-min charts.

  3. I have put together my latest and last detailed research piece for this March opex week.

    https://pugsma.com/denalis-turning-points-2/denalis-turning-points-2020/

    I still do not have a strong analog for this market. The persistence of intraday buyers (3 out of 4 candlesticks are green this week) has meant that most deeply negative opex weeks like December 2018 do not compare well to the current price action.

    Still, per the research, the most likely two scenarios given the extreme losses of this week and the price action on Wednesday post the break of 2380 is for the March opex period low to be either on Opex Friday (20 – 30% chance) or post opex. This is simply based on the history of very negative opex weeks and breaks of perceived support like we had on Wednesday at 2380.

    Those looking for potential analogs could look at Jan 2016 opex week (2 trading days after Opex week bottom).

    For now, I am patiently waiting to see whether we have a rare Opex Wednesday bottom (given the extreme market conditions) or whether the more historically normal post opex bottom occurs next week.

    I have no insight into what might occur with all of the expiries on Friday. (they have always been somewhat of a mystery during negative markets)

    It really is all about the mood of investors and the news over the weekend that will determine whether the low is in on Wednesday or opex day or whether the March 2020 opex period low occurs some time next week.

    Back in December 2018, January 2016, August 2015 and a few other examples, it was negative weekend news. While in November 2012 or November 2008, the weekend news was positive and the market gapped up and went on the Monday post opex.

    I’ll be back with more next week.

    -D

    • Historical Reasons why WEDNESDAY might have been the Bottom

      First history is only history. It provides helpful perspective and market history does tend to rhyme, but it rarely repeats exactly.

      The historical research with respect to an opex period bottom was overwhelmingly clear about it being highly likely that the market would create a MAJOR opex bottom, the questions for me are always about timing and level.

      As I wrote above in the above research blog post,
      • Wednesday’s low could be THE LOW for this Opex period and for the overall move since February. There was certainly enough panic and outright liquidation on Wednesday afternoon. It does not fit with most of the extreme opex historical instances, but it is certainly possible. It felt like a real bottom and certainly was from a day trading perspective.

      • The BIGGEST question is WAS that it? Is that the low for this incredibly rapid move lower?

      Here are some reasons why Wednesday might have been the bottom:
      • The MOST Negative possible news was LAST weekend and many of the post opex bottoms were created with negative news the weekend after opex. Normally, one would expect greater follow through – but that was really Wednesday, especially with Oil making lows around $20.

      • March Opex since 2007 has had two NEGATIVE news events on the weekend before opex week – March 2008 – Bear Stearns (bottomed on Opex Monday) and March 2011 – Japan Tsunami (bottomed on Opex Wednesday)

      • VIX Option Expiry on Wednesday – I do not have a lot of data here, but clearly it was an important event with the VIX being above 70.

      • Opex Period below the Lower Weekly Bollo Band had 25 total instances with 20 Major Bottoms – Opex Wednesday had the most MAJOR Bottoms with 4 (as did Wednesday post opex) – Detail is in the blog post

      Ultimately, the market will do what it wants to do. All of the GREEN candles since 28–Feb (9 Green and 6 red) have indicated that there has been more intraday buying pressure than selling pressure, which is the opposite of what we normally have seen during negative opex weeks such as Dec 2018 or August 2015. The one recent opex MAJOR bottom that saw a number of green candles during the opex period was Jan 2016 (Wed post opex / post holiday bottom – this one looked like an Opex day bottom and even gapped up post holiday, but then had a RED Tuesday post opex and a final gap down)

      Lastly, with the ES Futures indicating a 75pt GAP up (at 6:30am EST) – most likely the LARGEST ever GAP UP on an Opex Friday and most certainly a Quad Opex Friday, I just thought I would check my data from 2009 – 2017. There were 5 large gap ups on Quad Opex Friday.
      • Mar 11 – (Japan Tsunami – Opex Wed bottom) – Market actually opened at the highs and traded down all day, but then gapped higher on the Monday.
      • Dec 11 – Gapped up and ran higher until about 10:30am EST and then turned and turned lower and closed near the low. Then went lower and formed a MAJOR bottom on Monday post opex
      • Sep 12 – had peaked on the Friday before opex week. Opened near the highs and then traded lower all day. Market was close to the highs – not really relevant
      • Mar 14 – New all time highs at the open – market traded down for a few days and then resumed higher till early April
      • Mar 15 – Gapped higher and went higher until the Monday post opex

      Only two of these are potentially relevant (Mar 2011 and Dec 2011). In March 2011 the bottom was in and in December 2011, the bottom did not form until the Monday post opex.

      My research for this HISTORIC opex period is definitely finished. It will be interesting to see how the market plays out in the next few days…

      While it is not FUN being in LOCKDOWN mode with all three kids stuck at home, it has been enjoyable to watch the markets and dig in to the Opex Market history.

      Have a good weekend,

      -D

  4. pugsma said

  5. pugsma said

    Interesting…

  6. pugsma said

    This is a really big bazooka … 1/3 of the $300B FED purchases coming today!

  7. pugsma said

    IF the USA FDA will approve existing drug Hydroxychloroquine for use a COIVD-19 therapeutic it could be a game changer!

    • R Swaim said

      My daughter’s one of the people working overtime on growing the virus to create an anti-virus. It’s always been a head jerker to ask “Watcha working on these days?” and have my baby (now 32) say anthrax, ebola, zika, and now CV19. Anyway, we talked about this a bit and her comments were essentially that it is being looked at as a treatment for those with CV19 to reduce the mortality rate and length of the pneumonia and other issues which cause the lung damage and actually kill. It’s a positive development and looks promising. The shortcoming is that it is only effective once patients have the disease, they are still transmissible pre-symptomatic, and still need the time for the CV19 virus itself to run its’ course. Plus the amount needed for a global pandemic level illness.

    • kazoom1618 said

      The hydroxychloroquine part is likely to happen, but both it and zithromax are known to extend the QT interval (in the ECG). Combining them can cause life-threatening arrhythmias. So pick your poison carefully.

      Here’s an excellent biochem review of how that works: https://www.youtube.com/watch?v=U7F1cnWup9M

  8. pugsma said

    Remember after a sustained down trend, we need to see the NYMO close above +20 to confirm a new sustained up trend.

    NYMO intra-day is at -30 today.

    MYMO Closes below +20, leave the SP500 vulnerable for a move to a lower low below 2281 (alternate blue).

    https://stockcharts.com/h-sc/ui?s=%24NYAD&p=D&yr=0&mn=6&dy=0&id=p32152966307&a=269536931&r=1450045167343&cmd=print

  9. R Swaim said

    An argument for the blue count:

  10. Does IWM have a unique count to upside? What is your take?

  11. MS53 said

    Bouncing off the 62 rt area off 2467 down here at 2354.

  12. pugsma said

    Most important outcome today (IF it closes here) is that the VIX is down -14% to 61.

    • wbart21 said

      reasoning pls? VIX sell/SPX buy trigger??

      • pugsma said

        Nothing to do with VIX sell, SPX buy trigger.

        However such a large VIX drop -14% with the SP500 also -1% is BIG positive divergence on the VIX with respect to SP500 is a potential positive indicator for the future gains in SP500 price.

  13. lauter1 said

    spx 15 min looks like a nice little expanded flat at about 61.8% retrace into 2342. Unconfirmed of course for now.

  14. pugsma said

    OT: My son-in-law (PhD Bio-Med) is a lead scientific cancer researcher at Novartis (NVS).

    He just sent me this promising announcement on Hydroxychloroquine from Novartis.

    https://www.novartis.com/news/media-releases/novartis-commits-donate-130-million-doses-hydroxychloroquine-support-global-covid-19-pandemic-response

  15. R Swaim said

    Heck of a wedge forming. How’s the VIX?

  16. ericclptn said

    I’m guessing that the market down hard not confirmed by a rise in the VIX has to do w/ the options floor sucking premium out of puts during this OPEX. I’d love to be wrong cuz I’m pretty long…

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