However, the longer the upward run extends without a correction and with volatility clinging to historic lows, the greater the downside risk becomes, he tells IGTV.
S&P 500 Fragility
The S&P 500 is testing an 8-year resistance level and struggling to breach it, William said, warning there is a negative phase of a major timing cycle coming in the New Year. If the S&P 500 stumbles at 2450 he suggested it would bottom out at 2075.
He said he would be long on S&P 500 but with tight stops.
Facebook, Amazon, Netflix and Google, the so-called FANGs who are behind much of the climb in the wider US stock indices, could signal fragility if one falters.
Facebook, like the other FANGs, has been on a bullet proof upward trajectory, but is testing a 6-year resistance level of $180, William noted. If it climbs past the psychological $200 level, that would be very positive. But if it failed to hold at $180 and slipped through $158 this could be a signal for a wider correction. It is a case of the higher they climb the harder they fall, and the cycle is suggesting a correction early in 2018. If divergence falls below 62 that would be hailing a bear market.
IBM – price breaking with fundamentals
IBM could be described as old tech. Its price has dipped since a 2012 peak, but William suggests this may be a case of fundamentals not being reflected in the share price. However he explained how if the downward trend continued it could be a shorting opportunity.