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Stocks Fail to Climb Through Critical Resistance

By Michael KramerStock MarketsNov 15, 2022 03:44AM ET
www.investing.com/analysis/stocks-fail-to-climb-through-critical-resistance-200632360
Stocks Fail to Climb Through Critical Resistance
By Michael Kramer   |  Nov 15, 2022 03:44AM ET
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US500
-1.04%
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GS
+0.13%
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JPM
+1.55%
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AMD
-2.51%
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XLF
-0.19%
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VIX
0.00%
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Stocks closed lower on Monday by around 90 bps on the S&P 500. The sell-off came late, pushing the S&P 500 to approximately 3,960. Four thousand served as a robust level of resistance all-day, which is no surprise given that it is the highest concentration of gamma. That should continue as resistance unless call options are added to higher strike prices. If 4,000 remains, it looks like the index can be topping out.

The S&P 500 also managed to retrace to the 61.8% level of the August peak to the October CPI low.

SPX Index Hourly Chart
SPX Index Hourly Chart

Yesterday’s high also marked the 1.618% Fibonacci extension off the November 2 lows.

S&P 500 Hourly Chart
S&P 500 Hourly Chart

The structure of the S&P 500 futures looks terrible, and these patterns we have seen a lot in 2022. I might need to redraw the diamond top later. We just saw something similar at the end of October and the beginning of November, and typically these structures are unstable and lead to a new low. Today will be an important day to see how it plays out.

S&P 500 Futures Hourly Chart
S&P 500 Futures Hourly Chart

VIX

For the VIX, there are lots of calls above the 23 strike price and many puts below. It also looks like a diamond or inverse Head And Shoulders on the VIX. This makes sense since the VIX trades inversely to the S&P 500. The owners of all the calls set to expire Wednesday need to get the VIX up soon if they want a chance to get them in the money.

VIX Hourly Chart
VIX Hourly Chart

AMD

The move higher in Advanced Micro Devices (NASDAQ:AMD) is bizarre, given how bad its results and guidance were. If AMD stopped and reversed here, it wouldn’t be a surprise, given it hit the 38.2% retracement level off the August highs yesterday.

AMD Daily Chart
AMD Daily Chart

JP Morgan

It looks like JPMorgan (NYSE:JPM) may be ready to turn lower. The stock appears to have formed a bearish evening star Doji. The equity also stopped at resistance around $135, and the RSI seems to be rolling over after becoming overbought.

JPM Daily Chart
JPM Daily Chart

Goldman Sachs

I still don’t understand why Goldman Sachs (NYSE:GS) has risen a jaw-dropping 30ish% since earnings. Maybe I missed something along the way. On top of that, the RSI is well above 70.

GS Daly Chart
GS Daly Chart

Financials

I point out JPM and GS because the financials sector has driven the market higher, and if that part of the market goes, the market will lose a key leader. The XLF rose to resistance around $35.65 on Friday and reversed yesterday. The trend line is still higher, but there is a considerable gap to fill around $34ish.

XLF Daily Chart
XLF Daily Chart

Original Post

Stocks Fail to Climb Through Critical Resistance
 

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Stocks Fail to Climb Through Critical Resistance

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Comments (9)
Joseph Levy
Joseph Levy Nov 15, 2022 10:54PM ET
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Michael when you look in the mirror do you see a genius or some one who is wrong many times?
Mario tragik
Mario tragik Nov 15, 2022 8:30AM ET
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lol Kramer omg poor fellow, must be tough being dead wrong time and time again.
James Ayala
James Ayala Nov 15, 2022 8:30AM ET
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Agreed
Leon Kelly
Leon Kelly Nov 15, 2022 7:36AM ET
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good work
Todd Holaday
JustWilliam Nov 15, 2022 6:32AM ET
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Same song, 1035th verse
Mark Snoe
Mark Snoe Nov 15, 2022 5:53AM ET
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@MichaelKramer: it is too early to celebrate your bear feelings of market. Technically still not overbought. Market still ignored economical data and FED direction
Djamshid Bakiev
AMMM Nov 15, 2022 5:49AM ET
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RSI divergence on the S&P chart: although index grows, RSI declines. This is a topping out sign and might lead to price depreciation. I did not like yesterdays sharp sell off, given the weakness of the Dollar index it should have propelled through 4K resistance. This looks like a sign of exhaustion in the buyer's camp. So it might retest yesterdays high and move a bit higher if dollar weakens again, but price action says this might turn to the south sooner than later.
Kris Jay
Kris Jay Nov 15, 2022 5:42AM ET
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still tough to tell.  the stocks are going up as 1) rally after midterms, imbalanced senate, WH and House historically have meant a rally 2) 50 bps in Decembver is seen as a "fed pivot" so all good news from that point forward in many traders minds.   so choice is to build the short position from the rallies and hold on until Q4 earnings season or just go with the rally flow being sure to exit before it tumbles down. No matter what numbers come in (other than CPI at 2%) it will be a long, long time working to get inflation out of the economy.   Carl Icahn thinks years, I would say at least late 2023, at least waiting to get housing to catch up and be hit.
Kris Jay
Kris Jay Nov 15, 2022 5:42AM ET
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its tough, gotta think like the guy not looking at the data who will drive AMD/GS/etc to highs due to the "bargain prices", not realizing that the next quarter wont be good either.   It doesnt seem like jumping into the rally long is smart, though as Michael WIlson's SP500 target of 4100-4200 is not far away, just 5%.    maybe best to build a short weighted position in SP500 as it goes up to 4200 or even 4400.
David Beckham
David Beckham Nov 15, 2022 5:23AM ET
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Ok then it could go up little more until you stop posting
Stan Flation
Stan Flation Nov 15, 2022 4:13AM ET
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Thanks for your article, Michael!!! It looks like after CPI and inflation, and possibly a good record of PPI today, a Christmas rally is served, if the FED, Russia, COVID, etc. allows it!!! Greetings!
 
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