Market Pulse: 2020.09.14

Highlights that will move the stock markets this week:

- The Fed meets on Wednesday for the final time before the Nov. 3 presidential election with investors hoping to learn more about its decision to tolerate higher inflation.  
The Fed’s decision to tolerate periods of higher inflation effectively means that interest rates will remain lower for longer.
Meanwhile, the Bank of England and the Bank of Japan will both hold policy meetings just hours after the Fed on Thursday.

- Markets will also be paying close attention to data on U.S. Retail Sales for August, out on Wednesday, and initial jobless claims figures on Thursday
The number of new claims for unemployment benefits hovered at elevated levels last week, suggesting the labor market recovery from the COVID-19 pandemic was stalling as government financial aid to businesses and the unemployed dries up.

- Last week’s volatility in stocks could continue with a much-awaited fiscal aid package stalled in the Senate and the election looming. 
Some investors are worried that last week’s stock market volatility (Nasdaq -10%) is the start of a larger sell-off that will throw the market off its course after a six-month rally.
But other investors view the recent slump as a healthy consolidation after a stunning five-month rally that was powered by a small group of heavyweight tech companies and massive amounts of fiscal and monetary stimulus.

- Brexit news: in the UK, the government is to begin debating its controversial internal markets bill which could wreck its EU divorce treaty. 
The British government is to begin debating the internal market bill on Monday and while Prime Minister Boris Johnson has an 80-seat majority, internal discontent over the bill could test his leadership.

(Edit from

These are the price levels and patterns that I am going to follow in detail this week in the three main indexes of Wall Street, for applying my Price Action Analysis. All the charts are in the 4-hour timeframe, the ideal in the current market behavior. for swing trades.

1. SP500 SPX, close $3,340.97

Supports: 3,300 (psychological, as it's a round number) > 3,265.94 (SMA200 of the 4-hour chart, in light blue) > $3,200.21 (purple 2-week support, with 3 touches last month) > $3,136.36 (Fibonacci Retracement 78.6%)

Resistances: 3,378 (6-month red strong uptrend line) > 3,392.52 (its February high, its most important for this week) > 3,541 (high of the recently popular 3-year "megaphone" pattern) 

Plus daily yellow S/R levels, for day trades.

Notice the last green pin-bar candle after two red shrinking candlesticks. That could mean a reversal, that needs to be confirmed with a momentum one.

2. Nasdaq Composite COMP, close $10,853.54

Supports: $10,790 (Fibonacci Retracement 23.6%) > $10,680 (SMA200 of the 4hour chart) > $10,369 (purple 2-month support, important as it had many touches) > $10,000 (key psychological number and also its Fibonacci Retracement 38.2%) 

Resistances: $11,000 (the most important now, if it's widely break could be a powerful bullish signal) > $11,330 (6-month red strong uptrend line) > $12,074 (recent all-time high) 

Plus yellow daily S-R levels.

Notice that a bearish head and shoulder pattern is being formed now. It's not as perfect (small shoulders) and also need a decreasing volume this week. Just check it.

3. Russell 2000 ETF IWM, close $149.15

Supports: $149.28 (purple 1-month support) > $141.06 (Fibonacci Retracement 61.8%) 

Resistances: $150 (psychological round number) > $153.02 ( Fibonacci Retracement 78.6%) > $154.32 (SMA200 of its 4-hour chart) > $155.02 and 159.32 (month resistances, low and high of its recent flat channel) > $160 (6-month red strong uptrend line). 

Plus yellow daily S-R levels.

Last week its price formed a  bullish double-bottom pattern with the required 20 candles in between. The recommended way to trade this is using the reversal strategy show from a recent post: draw an immediate trendline (not shown) and wait for its break plus additional signals through the next candlesticks.