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S&P 500 Weekly Chart & Parabolic SAR - Next Week Could Be Interesting

The Parabolic SAR has not changed the direction yet.  S&P 500 closed above the Parabolic SAR 3775 before touched the low of 3791 on Friday.  Unless there is some great news that may change the current sentiment before Monday's open, it's very likely the Parabolic SAR will change the direction.  S&P 500 will need to open probably above 3830 to avoid the change.  

Then, the question becomes when the "buy the dip" entry point will be.  If it is similar to the August - October correction last year, we may look at a 300 to 400-point correction. The buy-the-dip entry point could be at around 3500 to 3600.  I am not quite sure if the correction will be quite drastic as the one last March simply because the economy is not that bad.  The banks and tech companies are making more money.  The travel industry might turn the corner later this year - Maybe more toward the 4th quarter given that the speed of vaccination is very slow around the globe.  

One thing jumped out at me was this shortage of chips in cars.  I hope the situation does not exacerbate further because it might spook the markets.

The U.S. Dollar charts might be trying to tell us something.  On the weekly chart above, it closed at 90.92.  The Parabolic SAR indicator stood at 91.36.  Perhaps, Dollar will turn the corner next week as well. 

On the daily chart though, the Parabolic SAR indicator has turned green.

S&P 500 Weekly Chart and Parabolic SAR - 3775 vs 3829 - Will the Direction Change Soon?

On Sunday, 2/21, I posted the S&P 500 weekly chart and did a comparison between this wave from March, 2020 and the one from February 2016 to March, 2020.  See the chart below.  At that time, I thought this wave might come to an end in a week or two.  

I think we are getting very close.  Today's selloff is alarming.  The current Parabolic SAR stood at 3775.  The S&P 500 index closed at 3829.  We should know soon if the correction finally arrived.  From 3950 to 3829, the index has retraced 121 points.  How big will this correction be this time around? 

S&P 500 Weekly Chart & Parabolic SAR - Change Is Coming Soon?

If history could somehow predict the future, what is your take on the S&P 500 weekly chart and the Parabolic SAR indicator below?

Based on the past uptrend Parabolic SAR counts, a correction, big or small, becomes imminent when the count is near 20.  Maybe within the next week or two, we'll see some kind of correction.  Is it time to take profit and wait for a better entry point?

S&P 500 Monthly Return Chart: Is a Frequent Monthly Return over 5% the New Norm?

I was looking at the S&P 500 monthly return chart.  It used to be the 5%+ monthly return occurred after a a big dip in the previous month.  However, we have had 4 over 5% monthly return in 2020.  We could exclude the April one because there were 2 sharp drops prior.  That still leaves us three, especially in November, 2020, it registered a whopping 10.75%.  I know.  Nasdaq went up 40%.  Tesla went through the roof.

Today, the S&P closed at 3913.  That means it's been up more than 5% since January 31, 2021.  If we have a good month in February, it's quite possible March might be a tough month.

S&P 500: Parabolic SAR Moves up to 3850 Tomorrow

The Parabolic SAR will probably sit at 3850 tomorrow.  It's getting close.  Today's low was 3885.  Will S&P 500 drop 63 points tomorrow?  It's doubtful, considering there is really no bad news out there.  The sentiment remains bullish and complacent.  

I also want to share a few Fibonacci extension levels charts.

The first one does not look quite right, does it?  I set the first wave up, high on 3/31/2021, retracement low on 4/1/2021.  It did predicts correctly on a few highs and lows, but not quite there.  

The second chart looks much better.  I set the first wave high on 4/29/2021 and the retracement low on 5/14/2021.  However, it predicts the 161.8% high at 3884.  Now, the index is above that level, and 3884 does provide some support.

The last chart also looks good.  I set the first wave high on 6/8/2021 and the retracement low on 6/15/2021.  The 100% high is at 4006.  

S&P 500: Parabolic Time/Price SAR - A Few More Days to Go?

I applied the Parabolic SAR on the S&P 500 daily chart today.  It looked quite similar to the times from January, 2020 to February 19, 2020.  Based on the patterns from the past few years, when Parabolic SAR turns green, the index rises between 100 and 300 points.  Each period lasts from 10 to 25 trading days before some sort of correction takes over, which can be minor or major.  

The last time it turned green at 3836 on 2/4/2021.  It climbed as high as 114 points.  Today, S&P 500 was on the 9th green-dot up-trend day.  What if...

  1. We are close to the highest point and the correction is imminent.  We may still have a few up days yet because the current green dot sits at 3813.  It is going up at about 20 points per day. 
  2. 3836 was the starting point when the dot turned green.  Based on the past patterns, each period the index could climb up to 300 points; therefore, 3836 + 300 = 4136.  The index closed at 3931.  We still have 100 to 200 points to go yet.  
Just for comparison, the dot turned green on 2/5/2020 at 3324.  It reached the high of 3393 on 2/19/2020.  The difference was only 69 points.  This year, the dot turned green at 3836 on 2/4/2021.  The index reached 3950 yesterday.  The different was 114 points.  Today is 2/17/2021.

The biggest difference between now and last February was the sentiment.  Last year, it was COVID.  It was something unknown.  It represented uncertainty.  Markets do not like uncertainty.

This year, there is no uncertainty at the moment.  Not yet, I suppose.  

An Excel Forecast: Can S&P 500 Monthly Closes Predict the Future?

Out of curiosity, I was thinking if Excel could forecast the stock market.  We know Excel's Forecast is a function of making predictions by using the historical data and analyzing trends.  Can the S&P 500 historical data shed some light on the future?  Maybe or maybe not.  I would like to think so because the price movement follows a pattern - when it gets too expensive, the price comes down, or vice versa.  The equilibrium price is the price that buyers and sellers agree.  Timing is something we can not predict.

I took the S&P 500 monthly closes from Yahoo Finance from 3/1/2010 to 2/12/2021 and put them in Excel.  Here's what Excel forecasts.

Ignore the timing factor even though it predicts an immediate sharp pullback of the S&P 500.  However, the long term outlook still looks rosy.  

The bigger question is whether S&P keeps going up from this point and then starts a major correction later this year or next year, or is a major correction imminent?

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