Here’s Why Stocks May See A Steep Decline On February 20

S&P 500 (SPY)

Stocks continued to rise on Tuesday with the S&P 500 increasing 15 basis points to close around 2,780. We are now about 15 points from our zone of resistance at 2,795. I’m getting the sense that the rally may pause tomorrow, February 20 with a steep pullback to around 2,750 over the next day or two. There appears to be short-term rising wedge forming in the S&P 500, and then there is a pretty sizeable gap at that level. It would at the very least suggest a drop to 2,760.

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s&p 500, spx

No, I don’t think it changes anything longer-term. No, I don’t think a one or two-day sell-off is the end of a rebound in global growth or stocks. It will be a one or two sell-off, nothing more and nothing less. I’m sure all the headline will be something bearish like: “The Next Big Wave Lower Is Upon Us”, with this big scary bear and drool coming out of its mouth. I don’t believe that is the case.

oops, wrong one. He actually looks rather friendly. Hungry. But friendly.

Of course, I could be wrong, and the S&P 500 can continue to rally. I see a pullback in stock prices at the moment.

Nasdaq

We can see a similar pattern has formed in the Nasdaq as well.

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Nasdaq, ixic

Boeing (BA)

Boeing is one example of a stock that has a similar pattern forming in the chart. Maybe we will get some “trade news” tomorrow that reads something like: U.S. and China still light years apart.

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boeing, ba

Industrials (XLI)

The same pattern is present in the industrial ETF the XLI.

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xli, industrial

Consumers (XLY)

Here it is again in the consumer discretionary ETF XLY.

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consumer stocks

Be prepared, that’s all. Don’t be shocked. Again, maybe I’m wrong, but a lot of charts are all pointing to the same thing, hard to ignore. Still, at this point, I’m not concerned.

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Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice when the market changes. I am not right all the time and I do not expect to be. I ...

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