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January 4th, 2021: SP-500 Chart Update

Posted by pugsma on January 4, 2021

4:55 pm EST: The SP-500 price gapped from 3757 to 3764, quickly hit a new all-time high at 3770, then dropped steadily to the days low at 3663 and rallied to close at 3701.

Market Technical Notes: 

  1. NYMO: The NYMO closed down near -25.  The NYMO has not closed back above the zero line after closing below -20 at -31 last Wed Dec 23rd. Thus the NYMO has failed to clear the “crash zone” of -20 to zero. This is sign of weak market breadth and “could” lead to a significant SP500 correction, if the NYMO can’t close above zero soon. A NYMO close above the zero line will signal the next sustained wave up.
  2. VIX: The VIX closed up +18.6% at 26.97.  Note, the VIX trend has been higher since early December as the SP500 price rose. This is positive divergence on the VIX wrt to the SP500 and is a negative for the SP500. Need the VIX to break below 20 to confirm a melt-up SP500 scenario.
  3. Chart Pattern:  None.
  4. NYSE A-D Line Cumulative: The A-D line cumulative closed at a new all-time high with the SP500 closing at a new high of 3756 on Dec 31st. Thus, no negative divergence.  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 and it this could now be developing.

The primary (white/green) wave count is that the minor 3 or major [5]-P1-C3 wave up is underway to a target at major [5]=[1] 3972. Minor 3 should target 3916, where minor 3 =2.0*minor 1. Wave minute (1) of minor 3 completed at 3646 and wave minute (2) at 3512. Wave minute (3) up competed at 3770, where (3)=0.62(1) target at 3767.  The minute (4) wave low was at 3663, just below the 38% Fib at 3672. The minute (5) of minor 3 up to new all-time highs should be underway  Note: The primary (white/green) count as labeled remains valid for minute (4) above the minute (1) high at 3646.

The alternate (blue) wave slight less likely outcome is more intermediate-term bullish than the primary (white/green) count and is that the the major [5] wave will extend to at least 1.62*[1] = 4445. In this scenario, this first wave up from the major [4] low at 3234 to 3770 is only a minor 1 wave as a leading diagonal (max 3833). The minor 2 correction is underway and should drop to a 38%/50% Fib retrace at 3566 to 3502 into mid-January. From there, the minor 3 = 1.62*minor 1 target is at 4434 into late year 2021.

The must less likely alternate (red) wave count scenario is major [5]-P1-C1 could have ended at 3770, where minor 5=0.62*minor as an ending diagonal (max 3833). From the P1 top, there should then be a significant P2 correction to at least a 38%/50% Fib retrace at 3170/2981. Note: 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.

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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