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December 21st, 2020: SP-500 Chart Update

Posted by pugsma on December 21, 2020

5:05 pm EST: The SP-500 price gapped down from 3710 to 3685, then quickly dropped to the days low of 3637, rallied to 3703 and closed at 3695.

Market Technical Notes: 

  1. NYMO: The NYMO closed down near -30.  Closing below -20 is sign of internal market weakness (weak market breadth) and with the SP500 near the all-time high of 3727, this is a warning sign of potentially more selling ahead.
  2. VIX: The VIX closed up +16.6% at 25.16.  This another warning sign, as the VIX should not be this elevated near a SP-500 all-time high. The VIX should ideally drop below 20 to confirm the minor 3 of major [5]-P1-C1 wave to the 3994 target.
  3. Chart PatternPotential bearish Head and Shoulders (H&S) top with head at 3727, neck line at 3633 and a target of 3537.
  4. NYSE A-D Line Cumulative: The A-D line cumulative dropped significantly today and did not recover well with respect to the SP500 price recovery.  Another waring sign that negative divergence could form if the SP-500 closes at new closing high above 3722 with the A-D not at a new high. There likely wont be a significant top in the SP-500 without a negative divergence on the A-D line vs the SP-500 price.

The primary (white/green) wave count is that the minor 3 or major [5]-P1-C3 wave up is underway that should target 3994, where minor 3 =2.23*minor 1. Wave minute (1) of minor 3 completed at 3646 and wave minute (2) at 3512. Wave minute (3) up underway with (3)=(1) target at 3924. Within minute (3), wave i ended at 3629 and wave ii at 3544. Wave iii-(3) is underway with at target at 3860, where iii=2.62*i.  The major [5]=[1] target is 3972 to complete P1-C3. Note: The primary (white/green) count as labeled remains valid above the wave 2-iii-(3) low at 3633.

One possible alternate (blue) wave outcome is that the the major [5] wave will extend to at least 1.62*[1]. Wave major [3] at 821 points was only slightly longer (1.08) than major [1] at 763 points. Often when major [3] is weak, the major [5] wave will extend. The major [5]=1.62[1] extension target is at 4445. In this scenario, this first wave up from the major [4] low at 3209 to 3712 thus far is only a minor 1 wave as a leading diagonal. Minor 1 could have ended at 3727 or make a slightly higher high that 3727 (max 3833). The minor 2 correction should drop to a 38%/50% Fib retrace at 3540 to 3481 into mid-January. From there, the minor 3 = 1.62*minor 1 target is at 4443 into late year 2021.

The must less likely alternate (red) wave count scenario is major [5]-P1-C1 has topped at 3727 or will be is topping soon below 3833 (max) as an ending diagonal. From the P1 top, there should then be a significant P2 correction to at least a 38%/50% Fib retrace at 3183/2992. It will take a break below the 3501 pivot to make this alternate (red) wave count more likely and a break below 3234 to confirm it.

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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

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