Stocks Fail To Climb Through Critical Resistance
Michael Kramer | Nov 15, 2022 09:44
Stocks closed lower on Monday by around 90 bps on the S&P 500. The sell-off came late, pushing the S&P 500 to approximately 3,960. Four thousand served as a robust level of resistance all-day, which is no surprise given that it is the highest concentration of gamma. That should continue as resistance unless call options are added to higher strike prices. If 4,000 remains, it looks like the index can be topping out.
The S&P 500 also managed to retrace to the 61.8% level of the August peak to the October CPI low.
Yesterday’s high also marked the 1.618% Fibonacci extension off the November 2 lows.
The structure of the S&P 500 futures looks terrible, and these patterns we have seen a lot in 2022. I might need to redraw the diamond top later. We just saw something similar at the end of October and the beginning of November, and typically these structures are unstable and lead to a new low. Today will be an important day to see how it plays out.
For the VIX, there are lots of calls above the 23 strike price and many puts below. It also looks like a diamond or inverse Head And Shoulders on the VIX. This makes sense since the VIX trades inversely to the S&P 500. The owners of all the calls set to expire Wednesday need to get the VIX up soon if they want a chance to get them in the money.
Get The App
The move higher in Advanced Micro Devices (NASDAQ:AMD) is bizarre, given how bad its results and guidance were. If AMD stopped and reversed here, it wouldn’t be a surprise, given it hit the 38.2% retracement level off the August highs yesterday.
It looks like JPMorgan (NYSE:JPM) may be ready to turn lower. The stock appears to have formed a bearish evening star Doji. The equity also stopped at resistance around $135, and the RSI seems to be rolling over after becoming overbought.
I still don’t understand why Goldman Sachs (NYSE:GS) has risen a jaw-dropping 30ish% since earnings. Maybe I missed something along the way. On top of that, the RSI is well above 70.
I point out JPM and GS because the financials sector has driven the market higher, and if that part of the market goes, the market will lose a key leader. The XLF rose to resistance around $35.65 on Friday and reversed yesterday. The trend line is still higher, but there is a considerable gap to fill around $34ish.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.