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.
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.
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.
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.
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.