Where Will SPY Top Out?

To figure out possible upside resistance lets first analyze price movement off its late December 2018 low. This almost year long rally has produced 3 measured moves (MM) on the weekly chart. By looking closer at these measured moves, we can answer the following questions:

Has this rally been strong or weak?

Strong trends have measured moves with neutral or shallow retracements. Weak trends have measured moves with medium deep to deep retracements. MM1 (dominant) has a super shallow retracement, which is very strong. MM2 (supporting) has a medium deep retracement, which is weak. MM3 (supporting) has a deep retracement, which is also weak.

Verdict: The first 6 months of this rally was very strong, but the past 5 months have been weak. This rally is flashing warning signs.

How about the momentum?

Strong momentum has right-handed skewing and weak momentum has left-handed skewing. MM1 (dominant) has right-handed skewing, which is very strong. MM2 (supporting) and MM3 (supporting) both have left-handed skewing, which is weak.

Verdict: The first 6 months of this rally was very strong, but the past 5 months have been weak. This rally is flashing warning signs.

Any signs of slowing down?

One early sign of a rally slowing down is having the time range of measured moves decreasing. Then, resistance zones can be narrowed down using clusters of Fib extensions. MM1 (dominant) has a time range of 7. MM2 (supporting) has a time range of 7. MM3 (supporting) has a time range of 6.

Verdict: Time range is not giving a clear indication of slowing down and price action has not yet reached any Fib extension clusters indicating theres still more potential upside.

Upside Target:

My first upside target zone, based on Fib extensions on all 3 measured moves, is 330.32-335.42.

Downside Support:

The line in the sand to keep this rally intact is 292.39-287.79. This zone is based on a 309.65 high. This zone will move up with higher highs.

Pattern Failure:

If the MM3 low of 284.82 gets taken out, then that negates this forecast. This would violate the pattern of higher highs and higher lows. Also, if a new measured move forms with a time range twice as much as its previous measured moves, then it would become the new dominant MM. This would be a bullish development causing a brand-new analysis with higher upside expectations.

Conclusion:

Even though the 2019 rally is flashing warning signs of slowing down, I believe the odds are stronger of reaching the 1st upside target than the 284.82 low. I will continue to monitor this market and give updates as warranted.Therefore, I would look to buy dips in the ES futures or SPY ETF. I will continue to monitor this market and give updates as warranted.