All signs are pointing towards 2020 being a pivotal year. If we examine some trends in the stock market, it appears that the current mountain formation in S&P 500 $SPY is nearly finished forming and now we are in anticipation of whether an uptrend or downtrend indicator will develop. Previously, although moving past the 161.8% fibonacci retracement point into new highs, the larger correction area has formed the current pattern in which the $SPY seems to be making a similar pattern to the one in Nov 2015 but also to Nov 2007. This is a time to be cautious, but not become overwhelmed by market psychology in which people might begin to take on new risky positions. Certainly, this is not an ideal time to be bullish, as upwards signals have not formed yet nor bearish, as $SPY is currently bouncing in the correction area.
In the current $SPY mountain formation, the next couple of months could be volatile and bounce back and from the correction area of 256.18 - 285.16, causing whiplash to many short-term traders. However, from a long-term view, this is not anything new and many opportunities can start to take shape within the next couple of months, dependent on whether signals form to indicate a continual uptrend or an impending downtrend. Although currently, we are still in the correction area, if an uptrend signal forms around JAN-MAR 2019, then that would be the opportune time to enter a long position. However, if uptrend signals do not form during that time frame, then there is a possibility that $SPY will move towards the 100% fibonacci retracement area to 207.27 by Sept 2019-Jan 2020.
$SPY is currently in the correction area of 256.18 - 285.16 and is forming a pattern similar to both Nov 2007 and Nov 2015. Uptrend or downtrend indicators by JAN-MAR 2019 could indicate the direction of movement of $SPY towards 2020.
Examining tech stocks, Apple $AAPL is also currently in a correction zone similar to the pattern in Nov 2012, and could further move to the lowermost support towards 147.47. However, a consolidation area from Aug 2019-May 2020 has the potential to form uptrend signals that could indicate $AAPL's next bull cycle.
$AAPL is currently in the correction area of 147.47-181.33 from new highs and could consolidate around AUG 2019-MAY 2020 in its next potential bull cycle.
If we examine Alphabet $GOOG, the tech giant also has been in a correction from new highs and could potentially move sideways in consolidation from the 992-1198 area towards April 2021. Although, $GOOG could also move towards the secondary support at 950, the stock tends to move sideways before a strong bull cycle into new highs.
$GOOG: after reaching new highs, the tech giant could move sideways in a potential snake-like pattern towards 2021 before another potential bull cycle.
In terms of price movement, Facebook $FB is still a relative baby in that the stock has only been around for 6 years and new patterns are continually forming. Currently, $FB looks to be entering an area of potential consolidation in the 122-144 area that could last until AUG 2019 towards 2020.
$FB in correction area after reaching new highs in July 2018. The social media giant could be in an area of potential consolidation and moving sideways towards 2020.
All in all, it looks to be that 2020 will be a significant year and could potentially signal another bull cycle for tech stocks. However, as the $SPY has been in a correction zone from new highs, the new pattern formation will determine within the next few months if there will be a continuation of further highs or a pull back towards 207.27 by 2020.
Although, there might be whiplash and choppy waters for short-term traders, a long-term perspective should ease the minds of investors who are looking at long-term patterns, and not be easily shaken up by prevailing market psychology. However, since this is a transitional time, it is also a time to be cautious and risk averse, making certain that one is prepared for what happens towards 2020.
By Sierra Choi
Disclaimer: This post is not intended as stock market nor investment advice and is for educational purposes only.