Tricky Election Pullback in the Stock Market

The tech indexes as well as the broad S&P 500 keep on being in the absolutely confirmed bull market in the monthly und weekly charts.

The accomplished lows after the Brexit referendum have a special meaning for the broader US stock markets, given that they finalized significantly higher lows in the uptrend year 2016.

The S&P 500 rose impulse-like from the Brexit referendum low to the current alltime-high (ATH) and year high = 2193.81 pts. This first initial impulse lasted for 8 week candles = classical impulse that oriented itself cleanly by the important high 8 Fib number.

The achieved 8 week up impulse Brexit Low ==> ATH defined the presently most important resistance for the market. It’s the Blue Arc. This arc is actually resistance in the yearly time frame and ATH resistance arc at the same time. Of course, the Blue Arc is also the dominating resistance in the weekly time frame… thereby it’s extremely important for the market.

Since this Blue Arc has put out an important trigger mark = magnet that’s pretty easy to be identified and since the most dominating and strongest market support at present is likewise easy to be identified, we can use those two – currently most important – magnets for signaling in the short and medium terms. Such as last happened within the free GUNNER24 Forecasts, Issue 10/09/2016:

We assessed then, on the one hand that A) only a clear weekly close above the Blue Arc (2172) would have had to lead the S&P 500 up to the 2200.50 first square line resistance through the US Election. It didn’t happen like that…

On the other hand B) a weekly close below 2148 pts = a weak sell signal until the election date (11/08) would newly have had to force the index to the confirmed important and strong ATH Support to be tested and to the 2115-2110 GUNNER24 Sell Target to be tested. This is what did happen. The current pullback/consolidation low is at 2114.72 pts.

C) Furthermore, there was the assumption that the 1*1 Bull Angle should have had to be tested till the election date. This important test is due yet!

Update of the S&P 500 and the dominating 8 Candle up, plus some new and valid buy and sell triggers through the election week:

Meanwhile, the Blue Arc is week-high resistance, 6-7 times tested negatively. Thereby, the Blue Arc resistance dominance in the yearly time frame has augmented.

==> The Blue Arc is furthermore the most dominant resistance magnet. So, it’s got to be for 99% sure that any coming weekly close above the Blue Arc within the next 3 week candles will release a monstrously strong rally move up to the 2200.50 first square line.

==> The Blue Arc is at 2150.50 next week and taking its course at 2142 in the election week. Thus, the following weekly GUNNER24 Buy Signals will be valid till the election week:

A) If it closes above 2153 next week and/or B) above 2145 in the election week, 2200 pts will be activated finally as GUNNER24 Uptarget and 2230-2235 as GUNNER24 Main target.

Buy signals in the daily time frame in case the Blue Arc succeeds to be overcome till then:

A) If the S&P 500 shows a daily close above 2155 in the course of next trading week, likewise the 2200 pts will likewise be activated finally as first GUNNER24 Uptarget and the 2230-2235 as GUNNER24 Main Target.

B) If the S&P 500 shows a daily close above 2145 in the election week, likewise the 2200 pts will be activated finally as first GUNNER24 Uptarget and the 2230-2235 as GUNNER24 Main Target.

Let’s go now to the consequences that would result from a final break of the ATH Support resp. of the 1*1 Bull Angle:

The index is squashed now more and more between the Blue Arc main resistance and the ATH Support, thereby maneuvering itself increasingly into the final decision mode. The ATH Support was the obvious price target for the currently running consolidation/pullback having been tested successfully twice so far.

The 1*1 Bull Angle was ditto always a normal consolidation/pullback target. So, several weeks ago, there was the prospect that only a test of this extremely important support magnet might end this consolidation/this pullback. By and large, I consider the 1*1 Bull Angle as a necessary time-target, whose being worked off in the pullback might certainly be required. In fact, it might till shortly before the US presidential vote.

Watch! So far, the 1*1 Bull Market has NOT YET been tested/touched. The low of last week was just very close to work off the 1*1 Bull Market Angle!

Thereby, the indeed compellingly required test of the 1*1 Bull Angle is obviously to be expected in the course of next week…

The 1*1 Bull Angle takes its course at 2126-2125 pts for coming week/candle!

Well, technically, as early as next Monday = last trading day in October, this important support will be worked off being tested for the first time in the current pullback. Interestingly, the index might open pinpoint at the 1*1 Bull Angle or shortly above - perhaps even pretty deeply below which is certainly most probable taking into our consideration the short-term consequences of the e-mail affair around Clinton!

To that one, the market participants couldn’t really wise up well before stock closing on Friday. So, the market might be willing to open next week BELOW the 1’1 Bull Angle.

As you certainly suppose or know, I’m a tremendous fan of timing, because frequently it’s more important for me to understand when things happen or might happen than where they happen (supports/resistances). So, a week opening BELOW the 1*1 Bull Angle on the last day of the month might trigger a powerfully strong sell signal that would have to lead to the 2016 1*1 Bull Angle at 2092 to be worked off till November 7 resp. 8!!

Since also the very first trading day of a new month may always gladly be a trigger for an important move, the market has positioned itself pretty precariously now according to the time factor. The 1*1 Bull Angle might not bear but fall. The market might abstain from lingering/remaining between Blue Arc resistance and ATH Support and above the 1*1 Bull Angle till the election in order to get started then. For this, watch the shadow-purple week candle scenario below!