Peak of the Triangle hitting Jan. 19, the US Budget deadline …

There are 2 deadlines in the future for the US that could impact the market.

The first deadline at midnight on January 19 includes the following areas: Agriculture, Rural Development, and the Food and Drug Administration; Energy and Water Development; Military Construction and Veterans Affairs; and Transportation, Housing and Urban Development.

Next on February 2, the remaining areas would lose funding. These are: Defense; Commerce, Justice and Science; Financial Services and General Government; Homeland Security; Interior, Environment and Related Agencies; Labor, Health and Human Services and Education; The Legislative Branch; and State and Foreign Operations

Missing these 2 deadlines could result in partial or complete government shutdowns.

There is a triangle forming with the peak hitting at around Jan 19th, when the first deadline hits.

There are 3 possible movements after Jan 19th, which I have outlined below…

SCENARIO 1: The SPY could go up, but the probability of the SPY going up is slim as the weekly indicators are already pointing to a downward movement.

SCENARIO 2: The SPY could have a 100% retracement to the beginning of the triangle at around 409 around Feb 2, where there is a second deadline.

SCENARIO 3: The SPY could retrace downward to the 61% level, around 436. This would be followed by an abc movement. The upward movement would retrace between 38% to 50% hitting around 452-457. It would then go back down to around 424 or lower. This abc movement would happen within a couple of days to 1 week. The anticipated end date of this pattern formation would be Feb. 5th.

I am not proficient at the Elliot Wave just yet, so I have marked a few points on the chart as other target points for the end date of this pattern.

Comment:

I try to be as detailed as possible on these charts, not necessarily for anyone else but so I can continue to learn. Repetition is key.

I believe we will be in a bull market until about January 2026. Before I can confidently say we are finished the bull market, I would like to see more correlation with the longer term indicators. But there will definitely be a pullback in the markets soon.

There are a few reasons why I technically think the market will move lower shortly.
1: RESISTANCE: The first reason is the SPY will hit resistance around 477, where it hit before. The first time it hit this resistance was on Jan 4, 2022.

2: DOUBLE TOP: The second top formation is hitting the target now. There could be a triple top later, but that wouldn't be until Jan, 2026 if the 2 year separation in tops repeats itself. Tops: Jan. 4, 2022 and (potentially) Jan 19, 2024

3: TRIANGLE CHART PATTERN: The third technical reason I think the market will move up or down is due to a triangle formation in the charts. When there is a triangle formation in the markets, this is a signal that the market will either go up or down from the peak. The peak of the triangle I have drawn is potentially Jan. 19, 2024. However, with a triangle formation, it is important to remember that the market can breakout anywhere from 2/3 of the triangle to the tip.

When there is a triangle chart pattern, the target of the move is usually determined by measuring the widest distance of the triangle and applying it to the breakout point (close to the tip of the triangle). This target is also correlating to a Fibonacci level.

4: FUNDAMENTAL REASON: Usually, there will be a fundamental reason to push the markets up or down. Coincidentally, the US Budget deadline is on Jan. 19th which is the peak of the triangle.

I am still learning a lot about momentum so that is a key part to my prediction. If momentum isn't there, my prediction will not happen in the time frame I have outlined.

I use the Fibonacci levels as potential target points in the future. I'm not necessarily saying the market will hit those levels but they are general targets for me.

I suspect it will move down as opposed to up as the weekly indicators are indicating a move down.
If you look at the beginning of Feb 2018, or October 2018, or even the big drop in 2020, the market dropped 61% then retrace between 38.2-50% then back down to another Fibonacci level. (usually 1.618)

Comment:

The daily indicators are indicating a move downward as of today so we should be moving downward shortly.
I use the DMI, the Stoch RSI, and MacD indicators currently.
I am still learning about momentum; I am using the Chande Momentum Oscillator to look at momentum.
I am also using volume too.

Comment:

So the SPY officially went out of the triangle today which means it should continue to head lower.

Trade closed manually:

The (hourly, 2 hr, 3 hr and so forth) indicators are showing a short term move up. Therefore I will close this trade.

The market was adjusting to put the the time out a little more.

Comment:

There were 2 deadlines in the future for the US set for Jan. 19th and Feb. 2 of 2024. But both of those deadlines have been pushed out until March 1st and March 8, 2024 which affected some of the chart movements. This has changed the triangle and will adjust the peak of the triangle.

I will draw another chart at a later time when the triangle has adjusted to get more of an accurate target.

Comment:

Below is an updated chart with some target points. I didn't just draw imaginary lines to suit my projection. I projected what this week's upper target would be based on the last 3 days of market movement. This aligned with the target of March 1st deadline.

And if you calculate the total movement that may happen, the end date correlates to Easter long weekend. I find that markets align themselves to long weekends. After Easter weekend, the market should bounce up.

Comment:

Trade closed manually:

This trade is now closed as the indicators have changed, making me change my predication of the SPY. It will probably go up for the next few days. When I see a new pattern being formed I will post another chart.