Market Correction Approaching? [S&P Q4 2019]

23 ก.ย. 2019

ARE WE ABOUT TO SEE A MARKET CORRECTION?

As we finish off Q3 2019 and approach Q4 2019, we see that S&P is holding strongly about its new all time high. However, exactly a year ago, as September 2018 wrapped up, it started the great correction of 2018. Whereby the market erased all of the gains it made for the whole year. Some would argue that the crash started in Dec 2018 with none other than President Trump himself officiating the opening ceremony with his famous tweet "I am a tariff man". However on hindsight, I personally believe that the 2018's great correction started at the end of September for the following reasons:

1. The October Effect - Whether you believe it or not, this psychological effect has many times spooked market investors over and over again.
2. Portfolio Re-balancing - Institutions would normally re-balance their books and portfolios
3. Global negative events - Trade War, yield curve inversion and economic slowdown

Fast forward to today, as we approach the last week of September 2019, our investment climate mirrors exactly the climate 1 year ago.
Technically speaking:

1. Market is testing it's all time high.
2. All time high also occurs near a Fibonacci Extension level of 76.4%
3. MACD indicator is starting to reverse from it's resistance where market reversed in the past. Moreover, we are starting to see divergence forming
4. The great correction of 2018 tested and reacted right above it's 200 period EMA. Now, the same 200 period EMA is also approaching a key Fibonacci Retracement level of 61.8% at around the 2590 region.

I explain in greater detail on my blog. Feel free to reach out to me!
thelaughingchartist.wordpress.com/blog/

Cheers.