Chicagostock Trading

Chicagostock Trading

2016 Top 5 Trends

In no particular order, here were the top 5 major market changing trends of 2016 identified by Chicagostock:

The stock market started 2016 weak, however recovered the highs of the year by summer, making a U turn. Those that were caught short, bearish, and wrong, were now forced to reverse position, thus creating the cup/handle formation, giving way to expand the U turn up to 20k.
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Nasdaq futures are staging the ultimate retest as the market is now 500 points from testing major resistance of where the market failed during the dot com bubble. By taking the low of the last major correction at 281775 (May 2013), using the January high of 362525, and the last recent low of 3412 made February of this year as the market’s attempted to breakdown only to fail, this gives upside fib extension levels of where the market can lead to. Thus far we have seen the market extend 38.2% at 3724, being where and what the market is working on now. Continuation of holding above the early 2014 high of 3635, this gives room to continue the squeeze higher as shorts capitulate. A 50% fib extension is met at 3821, followed by 3858 to complete the range expansion from 3635-3412 up to 3858. MAJOR resistance is met within 3900-4230 as the top level of the fib extension, being a 100% extension of the failed breakdown this year from last year’s move up. The first test of this range, should be sold with both hands forward, as this is the first test of the dot com bubble.



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The American Revolution and the SP500



The SP500 is back at pressing last month's, keeping the rising wedge of higher lows and higher highs since the May correction.  Putting the market back in the hands of sellers to defend just as a deal on the debt ceiling is made.

The last high at 172675 capitulated shorts above its previous high of 1705 as the Fed surprised the market with no taper and no Larry Summers.  This was followed by a pullback which failed to see buyers materialize inside 1680s as the gap was filled post shorts being squeezed.  Establishing a weekly bearish engulfment and eventually grinding down into lows of 1640 to test last and major support based off the 162475 August low.  Sure enough this held to see the market develop a reversal that was fueled by talks of a deal taking place on the debt ceiling. Shooting the SP 60 points back to retesting major resistance within 1710-1715 from the failed high in September.  Just as the SP tests this major resistance, Congress has struck a deal with less then 14 hours before the debt ceiling was to be breached.  Many are looking for sell the news to take place, and the test of the September highs here is the true tell as to whether buyers can continue to support prices to push through sellers now coming into defend this resistance. For the market to reject this test of the September high, a quick reversal needs to be seen to fall back below 1690 to give way to test support at 1658 based off the 1640 lows.  The longer buyers can support prices at these levels, the more pressure to squeeze out the September high and put in another higher high.  Should this take place, we see next major resistance levels coming in at 1740 as a 76.4% fib extension, and ultimately 1776 as a 100% fib extension.  Keeping in mind the May high at 1685 that led to the biggest correction of the year was also a 100% fib extension.  This would be ironic to see the market reach for this number, the year of revolution/America's birth, just as Congress' approval ratings drop to all time lows and they continue to kick the can down the road with no real solutions on cutting spending or the debt.

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Yen and Dow Seasonal Since 2007




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Major USD Reversal No One is Talking About





The US dollar is one of the most important, yet least discussed chart of the year.  Noticing the dollar's break below 79600 late January, early February, only to establish a bearish bias and lure in shorts before turning around higher. The market has held above its reversal window, thus reversing the bearish bias which has led the market to take out its year highs of 8100 set early January.  This U turn is having a major effect and pressure on commodity markets as the USD failed to break lower and is trading on new highs for the year. Take note of the gold chart how it is completely opposite of the dollar chart and is an upside down "U" from the beginning of the year.




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