S&P500: Consolidation Ahead

Technicals | Jan 22 2019

By Michael Gable 

The Australian market has recovered almost 500 points since the intraday lows on Christmas Eve. The S&P 500 Index has also had a great move higher, so we include a chart of that in today's report. Broadly speaking, we are in the zone where investors would consider trimming back some holdings in order to cash up for the next dip.

The S&P 500 Index has done its classic V-shaped recovery. What normally happens from here is that we get a consolidation. We can track sideways and use up a bit of time, or we have a dip to make a "higher low". We were positive on the S&P 500 Index a couple of weeks ago and commented that it should continue to rally. It is a positive sign that it has managed to make up a lot of ground instead of struggling near those lower levels. It has now retraced more than 50% of the falls seen across October – December. This is a key resistance zone, so we expect weakness to come in during the next few weeks or so before the S&P 500 Index is then ready to head higher again.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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