Technical Analysis of the US Markets – SP-500

Well the market telegraphed the move down in mid-April with the negative divergences forming in the major oscillators and the market kept its promise.

But where to go from here?

Market Outlook.

The market is in a downtrend so it is important for us to build a number of potential scenarios.

To do this I have incorporated Fibonacci, RSI and a new tool called Volume at Price.  Volume at price gives us a completely new way to evaluate volume, by enabling us to see volume not categorized into daily segments, but by looking at volume categorized into price segments.

Look at the chart.

Chart courtesy of FreeStockcharts.com Worden Brothers Inc.

We can see in the top pane, on the left hand side volume bars.  The longer the bar the more shares were traded at that given price level.  It is a really nice complement to our arsenal of tools.  In this example we can see that the price level of 1,100 for the SP-500 was significant and undoubtedly will be again.  Also the next major resistance point according to Volume at Price, is 1,060 which is very close to the February low.  So as far as downside targets go, we could assume.

• A pullback to 1,100
• A further test of the February low.
• A further drop than these to levels would signify that we need to seriously rethink our contingency planning.

I will not be long in the market until the market tells me to.  Right now the Price, the Volume and the Oscillators, on many time-frames are telling us to be careful.

Research I released in the Liberated Stock Trader PRO training tell us that Mondays are typically negative days, but in the last 10 years Fridays have been the worst day of the week.  This we saw in evidence on Friday the 14th May.  So we may expect further negativity Monday.  But an expectation is never a certainty.