Could the S&P make it all the way to the 2,645 level?
Typical S&P behavior is to retrace 50%. From empirical observation, this level is contacted more times than 38.2%, or 61.8%; so just the S&P behavior itself favors a 50% retrace.
However, it should be noted, on a close basis, the 2,485 level (where the market closed today) is an exact 23.6% retrace. This could be a pivot point as well.
The market itself will define where the pivot will be. At this point, from the 12/26 low, daily price action is making higher highs and higher lows.
The major trend break in the S&P 500, tells us the ten year bull market from the 2009, lows is finished.
What happens next is obviously up to the market itself. However, an estimated (first) support level is around 2,135 as shown.
12/21/18, 8:52 a.m. EST
That did not take long. The S&P confirms the neckline as it touches, then bounces (sort of) higher.
The standard measured move for an H&S top is shown.
S&P Head and Shoulders
The S&P looks to be forming a Head & Shoulders (bearish) pattern. If this pattern is in-effect, then we’ve identified possible key areas.
Could there be a decline into the proposed neckline area before the end of the year?
Well, it makes sense. The market is down for the year and accountants are likely calling their clients advising them to sell their losers and get a tax break.
That would set up for the (potential) January effect in the New Year.
1/6/19: S&P 500 At Resistance
The weekly chart of the S&P 500, shows we’re testing the underside of resistance. Support was decisively penetrated during the week of 12/21/18.
That support has now become resistance. This is typical market behavior. If the S&P is to rise higher into a 50% retrace, then price action may have to retreat (to build fuel) for an advance.
With such a decisive penetration below support, a move back above this level, now resistance, would be a significant bullish indicator.
S&P 500 Long Term View
A triangular wedge typically occurs at the end of a long and sustained move.
The S&P chart shows the last significant wedge was about seven years ago.
Especially bearish in the current structure is the 'throw-over' and return into the pattern.
Unless there's more manipulation to the up-side, the take away is the bulls have exhausted themselves after years of fomenting the market higher.