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sábado, 13 de febrero de 2016

S&P 500: We could be looking at a simple 'abc' corrective pattern?

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The index has fallen back to price levels of two years ago.
As is happening in all European indices and across the Atlantic still we have no trend change patterns that somehow anticipate the possibility that we have seen a market floor in the S&P 500. For the moment anything can happen.

For now what is before us is an interesting weekly candle in the shape of a "hammer" which normally is synonymous of a bounce (especially when it is preceded by a fall). What we can say is that in the end the potential formation of "head and shoulders" has been canceled, which is something. The fact is that from the point of view of technical analysis, the price seems to have found support at the base of the bearish channel of last year.

There is also the possibility that the minimum marked in the last fall, at 1,812 points, may be the end of the "wave c" of "abc" corrective pattern. If that is case, it means that recent falls have corrected/adjusted the significant increases of years ago and therefore this would be laying the foundation to build a market floor from which the S&P 500 will restructure upward again.

It is still early to confirm any stage but at least we will be very attentive to the important support we have in the minimum of the "hammer" weekly candle. Now, if the index breaks the support area of 1,812 points the market could drop to the area of 1,790 points (through which runs the weekly moving average of 200 periods) and even below levels near 1,550 points, above historical highs that were reached in March 2000 and October 2007.

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