I was talking a few days ago about this retracement on SPX being a definitional move that would define which scenario SPX would be running into the end of the year. In order to stay on the bear scenario bears needed to avoid a break back over the daily middle band yesterday, and when that inflection point was reached yesterday afternoon the bulls broke back over that with confidence.
Does that entirely kill the bear case here? No, but it makes the bull scenario much more likely unless the bears can reverse this hard, and I can’t see any obvious reason to think that’s likely.
The bull scenario here is that last week’s retracement retested broken double bottom resistance at 2020, and is returning to make the lower double bottom alternate target at a retest of the all time high at 2134. On a break above the higher alternate target is at 2174. SPX daily chart:
On the 60min chart I posted a rising wedge on twitter yesterday afternoon. At the moment that wedge appears to be breaking up with a target in the 2127 area. Strong support is at the 50 hour MA at 2059 and that would need to be broken with confidence as a first step to reverse the technical damage done to the bear case yesterday. I can’t see any obvious reason to expect that yet. SPX 60min chart:
SPX 15min chart:
The daily middle band is at 2073, and key support below is at the 50 hour MA at 2059, and the 5dma at 2058. For the bear case to be taken seriously bears need a daily close with a clear break below the 5dma. On my 5dma three day rule that would mean that the 2019 low would be very likely to be retested shortly after, and at that point bears should be back in the saddle. In the absence of that we are back on buy the dip and the next obvious target is a retest of the 2134 all time high.
