Weekend Analysis by Amateur-Investor.Net

(5/26/18)

For the last two weeks the S&P 500 has been trading between 2703 and 2745 which are the 50% and 61.8% Retracements Level calculated from the January high to the February low. 

As a result this has led to a consolidation pattern typically referred to as a Flat Base (FB).  We will likely see a breakout soon from this pattern probably next week.  The initial upside target would be at 2800 which is at the 78.6% Retrace, while the downside target would be near 2660, which is at the 38.2% Retrace.

Finally the Volatility Index (VIX) has been exhibiting a narrowing downward channel since March leading to a Wedge type pattern.  Typically a Wedge type pattern is followed by a decent move in the opposite direction of the trend.  In this case, since the Wedge is a descending type, normally one would expect an upside reversal at some point.  Since the VIX and S&P 500 usually move in opposite directions, an upside reversal in the VIX, normally would lead to some selling pressure in the S&P 500.  Thus we shall see how things evolve as we move into June.

 

 

 


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