SPX: New All-Time Highs or Bust?

By: Mike_Paulenoff

In my article last weekend, "Another Fibonacci Price and Time Intersection Approaches Heading into a Week Fraught with Headline Uncertainty," I discussed the importance of the intersecting time (Mon Feb 25) and price (2803.50 1% on the S&P 500) as a potential resistance area and reversal zone.

I noted that on Mon Feb 25, the rally from the Dec 26 low would equal 62% of the time spent in the Sep-Dec correction. And that the level of 2803.50 ( 1% = 2775 to 2832) represented the Fibonacci 76.4% recovery of the entire September-December decline.

The SPX made its high for last week and for the post-December recovery rally during the first two hours of trading that Monday at 2813.49. The morning rally was fueled by the headline uncertainty I referred to in my article -- specifically late Sunday's news that "Trump Delays Imposing New Tariffs on Chinese Imports."

However, my Fibonacci Price and Time window remained intact as serious resistance, despite that news and other potentially impactful headlines last week.

Heading into a new week of trading, this recovery rally resistance area and potential reversal warning zone continues to be technically relevant.

Headline uncertainty will remain acute this coming week, with possible tweets, interviews, and news stories about China trade progress and innuendos from China President Xi emanating from China’s National People’s Congress. Add to that media surrounding the potential release of The Mueller Report, earnings reports from some high profile retailers, and The February Employment (Friday morning).

Yes, this week will be a minefield of potential market-moving news that could continually put my Fibonacci Price and Time warning window to the test.

Let’s keep in mind that last week’s SPX range was 2775.00 to 2813.49. As long as the index remains between (or below) 2775 and 2832 on a closing basis, my Fibonacci reversal warning window will continue flashing its amber lights.

In the event SPX surges and closes above 2832, then my current warning window will be invalidated, with the next set of Fibonacci price and time warning parameters (i.e., for a potential price peak and downside reversal) projected to be March 8 and 2910-2970. At that point, the time spent in recovery will equal 76.4% of the time spent in the Sep-Dec correction.

In other words, if SPX closes above 2832, then the next upside price projection will point to a run towards the all-time high at 2940.91, with an optimal target of 2910 and a maximum target of 2970.

See SPX chart with Fibonacci Price & Time Turn Zones.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

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