Since Trump’s election, the SPY – S&P 500 has been hitting new highs almost everyday. Here on Fingraphs the price has over-ran the Hourly, Daily and Weekly targets expressing, clear signs of an overextended move. A probable consolidation period into Q2 2017 is expected.
At FinGraphs, we present all charts over 3 investment horizons using 3 indicators for each one of these investment horizons:
Potential Trend: shown by the ‘Bull’ or ‘Bear’ figurines on the upper left side of the chart.
Possible Targets & Timing: targets are shown by the Green, Red or Grey price projection beams. These possible Targets Zones define the potential left in terms of Price objectives and Timing (when the Ellipse at the end of the beam has entered entirely in the chart, potential timing to the objectives has been reached).
Risk assessment: defined by the blue oscillator, the ‘Risk Index’, fluctuating from Overbought to Oversold. When it enters these exaggeration zones and leaves them again, a potential top or bottom is confirmed.
1. ‘Weekly’ Left-hand chart, which is updated every week and gives the market perspective over the next few quarters:
Since early 2016 The S&P500 has been in a strong up trend. It should now be close to an intermediate top: our Impulsive targets up zone have been overpassed . The possible Timing of this impulsion is near completion as the green Ellipse has almost fully entered the chart ( Possible Timing, i.e. towards “the green Ellipse”) . The Risk Index has also just entered the Overbought zone . These 3 indicators show very little potential to the upside.
2. ‘Daily’ Middle chart, which is updated every day and gives the market perspective over the next few months:
Currently the “Bull” uptrend is still in place (Potential Trend) but all indicators are showing signs of exhaustion. Indeed, SPY has entered and over-run the price range of its possible Impulsive Targets up (Possible Impulsive Targets up in ‘green’). The Risk Index is Overbought (Risk assessment) and the Possible Timing left (“the green Ellipse”) is nearing completion (it has considerably entered the chart).
These three indicators express that the uptrend is showing signs of exhaustion, and could soon reverse for a correction or consildation.
3. ‘Hourly’ Right-hand chart, which is updated 8 times a day and gives the market perspective over the next few weeks:
The indicators of the Hourly charts also show signs of exhaustion but compared to the Weekly and Daily it seems to have finally started to reverse. The trend is still in a potential “Up” (Potential Trend) yet it has reached its impulsive potential up and has started to retrace. From a timing perspective there might be a few more days left before confirming a potential retracement (i.e the Timing Ellipse (Possible Timing) has almost entered the chart entirely).
In addition, the Risk index (Risk Assessment) has left the Overbought zone confirming a potential intermediate top and should correct for a few weeks through March.
Longer Term, SPY has been in an impulsive up since early 2016. Looking at the indicator, this potential uptrend is showing great signs of exhaustion: A probable consolidation period into Q2 2017 is expected.
Medium term , most indicators are also close to exhaustion, timing however suggests a few more days before starting to consolidate.
Shorter Term: an intermediate top seems to have been made early March, which might help turn the Daily and finally the Weekly.
An intermediate top seems to have been made on the hourly charts, while the daily and weekly Risk/Reward is stretched. This situation could suggest a consolidation into Q2 2017 for the SPY.
In wishing you outstanding success in your trading, your FinGraphs team.
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