Good afternoon, Daily Direction readers!
US stocks are set for a loss for the trading day as well as for the first quarter. This will be the first quarter of a full loss in two years, which of course also extends to the full year to date loss for the stock market.
The benchmark S&P 500 Index is down for the quarter by around 3% and the same on a year to date basis.
This comes as US inflation is at level highs not seen since the early 1980s. And this in turn is weighing on consumer spending as evidenced by today’s Personal Income and Spending data showing a sharp pullback.
As consumer spending is such a big component of the US economy as well as a driver of company sales and earnings, a pullback is not good for the stock indexes, including the S&P 500 Index.
Add-in the tightening actions now getting underway by the US Federal Reserve, and stock traders have more to worry about. And if that’s not enough, we also continue to have the continuing economic and market fallout from the Ukraine-Russia conflict.
Today, we want to let you in on a way to keep an eye on the risks and rewards of the general stock market and how Fibonacci levels can be a great indicator of support as well as resistance for both bearish and bullish markets.
Look for the Fibonacci Levels for Indicative Support
The S&P 500 Index is the definite market tracker for fund managers and traders in the US market. And as noted above, it is down so far for the quarter and for the year with fears by many that it may well continue to slip lower over time as we head into the second quarter.
Now, inside our futures trading advisory products, including War Room, Futures Edge as well as Tunnel Trading and Destination Trader, our call for the S&P 500 futures contract (ES) market has been to stand aside for now as the market is not providing a compelling case to buy.
But for our individual stock trading advisory services including Money Magnet Express, Burst Alerts Pro and Josh’s Top 5, we have plenty of great stocks that are performing even as the general stock market and the S&P 500 Index may well proceed even lower in the coming quarter.
To keep an eye on support levels for the S&P 500 Index, our friend, the centuries-old master, Saint Fibonacci, the mathematician behind the Fibonacci sequence numeracy provides some levels to be aware of for retracement levels if the S&P 500 Index slips further.
From the top of the 100% upward level of the Fibonacci sequence back on Jan. 4 at 4,818.62, the 76.40% retracement level puts the index at 4,617.63. We’re past that level, so the next level of support would be found at the 61.80% level that would equate to a level of 4,493.25.
And after that, the 50% level would equate to 4,392.80. Then moving lower to the 38.20% retracement level, that would equate to 4,292.30. If the market headed even lower, the 23.60% level would come up at 4,167.96. Finally, all the way down to the full 100% retracement would bring up the trading level of 3,966.96.
Traders Training Session: Master the Fibonacci Levels
Knowing these support levels utilizing the Fibonacci sequencing numbers provides traders with the power to identify risks and rewards in trades both in the general stock market index as well as for individual stocks.
To get the full rundown on Fibonacci levels, be sure to check out our tutorial video just below…
Keep On Trading,
Stay tuned for the next edition of Josh’s Daily Direction.And if you know someone who’d love to make this a part of their daily routine, send them over to joshsdailydirection.com to get signed up!