The 03/11/23 blog “Stock Market Fuel” noted that the Dow Jones Industrial Average (DJI) had two Fibonacci support points. One at 31,552 the other at 31,657. The DJI bottom on 03/13/23 was at 31,641 between the two support points.
The 03/11/23 blog also illustrated S&P 500 (SPX) Point & Figure support at SPX 3,815. The SPX bottom on 03/13/23 was 3,808. Subsequently U.S. stocks have rallied, however within less than one – week there have been three very important events.
- On 03/10/23 the SPX significantly broke below its 200 – day moving average and two Fibonacci support points. This break of strong support implies the start of a larger decline may have begun.
- There have been two U.S bank failures.
- Evidence indicates that the UK – 100 may have made a major top and could be in the early stages of at least a multi month decline.
These factors have increased the probabilities that U.S stocks may also be in the early phase of at least a multi – month drop.
The daily SPX chart courtesy of BigCharts.com updates the action.
Slow Stochastic has a bullish lines crossover and MACD – Histogram has a bullish divergence. These signals usually imply the SPX could rally for at least one – week. The FOMC will have an interest rate announcement on 03/22/23.
The reaction of U.S stocks to this announcement could initiate a strong multi – week rally or a multi week decline.
Blogs later this week will illustrate SPX – Elliott wave counts on the possibility that a major drop may have begun.