Fibonacci Resistance Levels on S&P 500 E-mini Futures Index

Depicted on the Weekly chart below of the S&P 500 E-mini Futures Index (ES), are two External Fibonacci Retracements, a Fibonacci Extension, and a channel.

There are two upcoming levels of confluence representing major resistance:

• the first is between 2139 and 2155 (which could be hit any day now)
• the second is between 2213 and 2216 (which could be hit around July 20th if this extreme bull run continues in an aggressive, sustained momentum)

I'd watch for any aggressive drop below 2070 to signal a possible re-test of the bottom of the channel around the 1980 level, or even lower (I'd watch for general signs of weakness in the Dow Jones Composite Index -- as noted in my post of June 20th -- as confirmation)...otherwise, if price holds above 2070, we could very well see the second target resistance level hit by July 20th.

Watch Out for the "Big Freeze" (Bull Squeeze)

From the Monthly chart of the Dow Jones Composite Index, I'm seeing a "dinosaur" formation from 1999 to the present (first the tail, then legs, neck, and finally the head and nose -- where price is now). We all know that dinosaurs became extinct...my gut tells me that this present dinosaur bull run is not sustainable -- and likely due for a very big fall -- possibly in a 2-tier drop (big drop, small bounce, and big drop).

There are three reasons why major support lies between 4733 and 4900 on this index, which, technically, could be hit by December 2015...there is a tri-Fibonacci confluence at that spot (denoted by the red rectangle).

Watch out for the "big freeze" (bull squeeze) by Christmas.

Greece: At The "Point of No Return"

There's nothing but thin air below price on the Greek Stock Index, as shown on the Daily chart below...the RSI indicator is hanging on by its fingernails and has yet to make a lower low even though price has...with so many rumours flying about these days on their debt repayment situation, it's anybody's guess as to who (if anyone) will keep it afloat (above the current "point of no return").

One May Trigger the Other: DJUSFB and SPX

The U.S. Food & Beverage Index (DJUSFB) pretty much trades "lock-step" with the S&P 500 Index (SPX), as shown on the Daily chart below...any significant and solid breakout of this year's trading in one of them should trigger a similar move in the other.

FYI, the DJUSFB is up 158% since its March 2009 lows, as shown on the percentage-gained graph below.

Big Move in Store for U.S. $

The "hammer" on June 4th did not confirm on the following Daily chart of USD...imho, a solid break either side of 98 or 95 may forecast what's to come for the rest of the year. My gut tells me that a big move is coming soon in currencies, one way or another...

The Fireworks Have Begun

Further to my post of May 27th, the fireworks have begun...see the updated Daily chart below of the World Market Index, as of today's close.

1900 was major support, which has been broken...watch for a potential drop to 1600 or lower, as mentioned in my UPDATE of May 22nd (noted in my original post of March 5th).

However, watch out for a possible bear trap...anywhere between 1850 and 1875...the RSI should stay below the 50 level to confirm that bears are in control.

I will say that it is interesting that this index has fallen, in spite of the dizzying heights reached by China's Shanghai Index and Japan's Nikkei Index...note the negative-diverging indicators on the following 2 Daily charts. If we see blow-off tops occur in these, we just may, in fact, see the World Market Index drop to 1600...rather quickly.

We may see an early indication of such bearish action play out in the currency markets...the U.S. $ is sitting just above major support at 95.00, as shown on the last Daily chart...watch for the RSI to move back above the 50 level as an indication that bulls are back in this trade.

What's Ahead for the Rest of 2015 for the S&P 500 Index?

As shown on the daily chart of the SPX below, the 50-day MA has, for the most part, held as major support over the past 5 years. Until we see that level breached and held, the bulls will remain, essentially, in control of this market. Although, since the last round of QE stopped at the end of October 2014, this index has spent more time hugging, and circling tightly around, this MA than at any other time during these 5 years...signalling a weakening and, potentially, an end to this bull control.

Without the benefit of any further QE from the Fed, buyers will likely be reluctant to commit new money into this market, which is up 204.57% since the closing-low on March 3, 2009, as shown on the percentage-gained graph below. So, while the SPX continues to consolidate, we'll see the 50 and 200 MAs eventually merge until price, finally, breaks up or down. Once a bearish moving average Death Cross forms, we should see a significant drop in price. Until then, expect more of the same...and, my 2015 outlook for equities may very well come into fruition...at the moment, the SPX is up 3.01% year-to-date, as shown on the last percentage-gained graph...I had forecast an overall price increase of 4% for this year (it reached 3.49% on May 21st...the target high to be surpassed and held if bulls are to remain in control).

So, in a nutshell, I'd keep an eye on the 50 and 200 MAs and their spread (widening or decreasing), and the 4% target-price increase to gauge either weakness or strength for the SPX for the remainder of this year.

Make-or-Break Time for World Market Index

N.B. Important updates can be found on the World Market Index (the latest one is May 22nd) at this link...

FYI...yesterday's chart of the index shows a drop and close just below the 50 moving average...stay tuned for fireworks...

Biotech Nearing its Peak?

As can be seen from the Year-to-Date graph below of the 9 Major Sectors plus the Nasdaq Biotech ETF (IBB), IBB has outperformed all of the 9 Major Sectors, so far, this year on a percentage-gained basis (by a margin of almost 2:1 over the highest Sector performer, that being Healthcare).

Does this, alone, mean that Biotech has reached its peak for the year? To look further into that question, I present the following three Daily charts:

1. Nasdaq 100  Index ($NDX)
2. Nasdaq Biotech ETF (IBB)
3. IBB:$NDX Ratio

First, we'll look at where the $NDX is sitting. Its all-time high is 4816.35. Price closed today (Wednesday, May 20th), at 4505.30 and is almost mid-way between the middle and upper channel (which began mid-November 2012). Over the longer-term, price can run up another 311.05 points before hitting the top of its channel and, at the same time, touching its all-time high by around mid-to-late August of this year (if it rises to and rides along the upper channel from now until then).

Secondly, price action on IBB has been very whippy since it hit its all-time of 374.97 on March 20th and is trading in a range that is sitting above a 200% external Fibonacci Retracement level (which currently forms major support at 341.64). We may see a final thrust of price up to retest its all-time high to form a double top (and sloppy triple top) before it, once again, runs into major resistance at the top of its channel. We could see some major profit-taking occur at that level, with possibly lower-lows made, as well, breaking below the 200% Fib level and the middle of its channel in the process.

The last chart shows the recent underperformance of the IBB compared to the $NDX. Price is sitting in between a 200% external Fibonacce Retracement level and the top of its channel. However, the Momentum indicator is showing recent strength of IBB, so I'd watch price action on this ratio chart to see whether it, either, breaks and holds above major resistance (above the 200% Fib level), or breaks and holds below major support (the top of the channel) for possible clues on near-term strength or weakness.

I think that by following all three charts above, you'll have a more complete picture of near-term and longer-term strength or weakness in Biotechs.

British Pound Running Out of Steam?

If you'd bought the British Pound back in mid-April of this year, you'd have made a pretty penny, as shown on the following Daily chart of $XBP...likely in anticipation of the British election, which was held on May 7th. Price closed at 153.79 on that day.

If price can hold above the 200 Daily Moving Average (156.59), the next resistance level is around the 162.50 price. However, we may see some whipsawing around the current price until the overbought indicators settle down a bit. And, this chart is still under the bearish influences of a Moving Average Death Cross formation, so price may simply be retesting the 200 MA before plunging, once again, possibly to the 50 MA (150.37), or lower...or it may stop at the above-noted close of May 7th before resuming its trek upward.

SPX:VIX Ratio: The Next Hurdle

170 is the next major resistance level to be overcome on the following Daily ratio chart of the SPX:VIX. This appears to be "make or break" time for SPX Bulls. 180 and 192 represent the next and final major hurdles (set in 2014) that will need to be overcome before Bulls can comfortably feel that volatility has been quashed while (if) the SPX resumes any kind of sustainable uptrend.

The following 60-Day 60-Minute chart of the SPX:VIX Ratio shows last Friday's large gap that will, ultimately, need to be filled at some point, since gaps on this timeframe tend to get filled.

As mentioned in my post of March 29th, 2100 is the "froth" level that the ES (S&P 500 E-mini Futures Index) will need to overcome. In the process, it will have to overthrow major resistance, which is formed by a double Fibonacci confluence level. At the time of writing today's post, price has yet to break and hold above Friday's high of 2113.50 and the all-time high of 2119.75 set on April 27th of this year.

Are volatile swings over with now? I wouldn't rule them out just yet until we see the above-mentioned levels comfortably broken and held...and backed up by larger volumes to support new money entering equity markets at these historically-high levels.

Where Does the U.S. Dollar Go From Here?

The USD may stabilize somewhat and swirl around this Fibonacci fanline at or near its current price level, as shown on the following Weekly chart, before, either, resuming its uptrend, or, perhaps falling to its lower Weekly Bollinger Band around 90ish. I'd watch the RSI to see if it remains above 50 to support a theory for higher levels.

Happy 4th Year of Blogging!

Thanks for stopping by and helping me to celebrate!

My Blog is 4 years old today...this is my 1103rd article...it's been fun...now for some cake...

...and maybe some strawberries...

...and maybe some ice cream...

U.S. Markets: The Safest Place to Invest?

The following 5-Year Daily ratio charts of the S&P 500 Index compared to Major World Indices shows that the SPX has underperformed all of them since the beginning of this year, and some for the past 1 1/2 to 2 1/2 years.

Price now sits at or near major support levels on all of these ratios. Unless serious buying begins to pour into the SPX, we may see panic selling ensue in U.S. markets. I'd keep a particularly close eye on the German, Japanese and Chinese indices for signs of any potential rotation of money from those markets and into the SPX, since their ratios are at the most extreme levels against the SPX during this 5-year period. Otherwise, the Fed may, very well, consider re-introducing another round of QE to compete with those countries' Central Banks' QE programs.