Rallying into FOMC

Rallying into FOMC

Last week I was talking about a backtest into the 5dma / 50 hour MA support area and we saw that, and another leg up over the daily middle band and the 50% retracement level that brings SPX up into resistance at the 61.8% retracement level at 2812 and the September rally high at 2816.94. I have a decent looking rising wedge from the low that has slightly overthrown wedge resistance and a lot of negative divergence on the 15min chart particularly. SPX 15min chart:

So what next? SPX is at significant resistance here, with the next level up over that resistance at the 50dma in the 2835 area. These are both significant resistance and either may well hold. I’d note though that if we were to see a serious break up over the 50dma, then I have marked up a possible IHS that has formed and broken up today with a target in the 2910 area. If SPX should spend any significant time over 2850, then that 2910 would be a credible target.

On the big picture we are likely soon to see a significant backtest on SPX, and that may extend lower into a full retest of the October low. If seen that may extend further into a retest of the 2018 low at 2532.69. Alternatively we might just see a partial retracement of the rally so far, and whichever way that goes we should then see a choppy sideways to up market into January. After that we should expect another big leg down and depending how that goes, 2019 may be a flat or red year like 2011 or 2015.  SPX 60min chart:

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