20 Feb 2022 SPX Weekly - War, Inflation, Omicron

Accuracy: 9/11 (81.8%)

SPX below 4600 - Correct

Trying to add more value and have a more structured analysis on this weekly SPX post.

• Last Week - I'll chart on daily candle, 30 minute candles, 5 minutes candle.
• Upcoming Week - I'll chart some possible projection scenarios.
• Economic Calendar - I'll talk about which are the key events that we need to watch.
• Miscellaneous - which can be anything happening in the market that is worth mentioning that can affect the market, this is for example earnings, covid, war, inflation etc.
• Prediction - Finally ending with a conclusion and prediction.

This is just to give a more consistent structure and agenda. After all I'm doing this weekly SPX analysis for my own sentiments moving onto the next week. If I continue to find more value to be added, I'll just include accordingly.

Last Week

From the daily candle chart, we see last week formed a lower low and lower high. This was followed by a double top the week before which happened at a 61.8% Fibonacci level which is also a previous support turned resistance around 4600. Last Friday, we closed near the previous swing low around 4300-4350 range.

On the 30 minute chart, we see a clear downtrend channel with Friday bouncing off the lower downtrend support line nicely. We are in such a volatile market now, we can see there are quite a few gaps happening because of news and events.

On the 5 minute chart, which is mainly looking at what happened last week's 5 trading days. We first see (1) where we had a gap up, I believe this is due to some news saying Russia is pulling back troops and might not invade Ukraine. This pushed up the market for a bit but it didn't last.

While the market was waiting for FOMC minutes (2), SPX was really moving in a small range. The moment FOMC minutes was announced, SPX had some good push upwards because there wasn't much surprise in the minutes.

Then we see (3), this is where there are news on Russia did not actually pull out their troops but in fact getting even more ready for an invasion. This caused the big sell off through Thursday and Friday until we need the support trendline that we see in 30 minutes chart which might also be some area of support we see in a previous swing low on the daily candle chart.

Upcoming Week

For upcoming week, I'll use the 30 minute chart to project my prediction scenario from a technical analysis perspective. Keep in mind on the downtrend channel still holds. We see that every down move, it pulls back up towards the previous support. So for the coming week, I'll expect it to do something similar. Continue the downtrend channel, maybe some pull back towards 4370 area and continues downwards.

Also note that continuing downwards, we are approaching a strong support which is tested in 2 previous swing low. During October 2021 and towards the end of January 2022, in the 4300 area.

So for next week, although the downtrend should continue, we should see some support in 4300 area on the downside. On the upside, we have the trendline resistance around 4380.

Putting all the above together. After a big move down last week, we should see some consolidation around the 4300-4400 range before any big moves. If any of the sides get broken, we might start to see big moves again.

Economic Calendar

First thing to note, next Monday market is closed because of US Presidents' Day.

There are still quite a number of 3 star volatility events most days, except for Wed. FOMC related events are still events that cause moves to the market even though its only listed at 2 stars. Sometimes the things they say surprises the market and we get some reaction to it. Other than that, the Economic Calendar for next week basically would weigh heavier on anything that is more closely related to the inflation topic we're going through.

War and Omicron

As the title suggest, not only inflation is the key movers now. In fact, Russia invading Ukraine have been the bigger mover. As news and rumor start to lead towards Russia starting their invasion, Russia starting to have more and more preparation for the war. With Olympics in Beijing ending today, Russia is trying to keep their relationship well with China not to start a war during Olympics. Which lead to more rumors that the invasion will start after Olympics next week.

On the other hand, we are starting to see news talking about Omicron being more severe than Delta variant. Note that this seems to be in the early speculation of the news. Nothing seem conclusive yet, we just start to see such news surfacing. Which leads to possible escalation of events. If subsequent findings does lead to show that another variant of Omicron did in fact cause more severity, it's going to affect the market as well.

Prediction

With chart giving a downtrend momentum and current context of war, inflation and omicron adding more negative sentiments.

SPX below 4450