A careful analysis of the Fibonacci timing factors on the S&P and Dow cash weekly and daily charts points to the likely termination of this rally during the week of May 18 th – 22 nd with a particular emphasis on Wednesday May 20 th . It would be premature to say that this will result in a move which would take out the March lows, but this analysis does point to the likelihood of at least a deeper downside correction than we've seen since the rally began.
The analysis is performed by counting the number of days between prior pivots and multiplying the duration of each swing by specific Fibonacci ratios. A reversal is likely at the point in time where the majority of these ratios line up, if the market is extending at that point.
S&P weekly chart:
Dow weekly chart:
Further analysis on the dailies allowed for the maximum effect to be pinpointed on May 20 th :
For shorter term futures; on the ES daily, price is currently holding at the initial upside target:
While we're seeing a decline pre market, so far no important support has been violated on our 45 minute ES or YM charts. I'd like to see ES maintain above 904 and YM maintain above 8366 in order to indicate that the pattern of higher highs and higher lows will maintain on these charts. A break of those levels will most likely shift the pattern in the short term to downside. In any event, we'll monitor intraday timing lows to project when a reversal back to upside on the short term is likely.
ES 45 minute chart:
YM 45 minute chart: