The recent correction of the S&P500 had many shorters and Bears wringing their hands, hoping to see a Bear Market that will make them a lot of money.
However, looking at our proprietary, quantitative S&P500 Futures LONG model, it does not seem there is all that room to go much lower than the bottom the market has printed some weeks ago.
The ESZ15 WEEKLY chart below shows what could happen if there was a new dive to lower levels.
The Retracement Levels LONG MODEL Table for ES (below), shows what are the odds that the market will rebound and invert its trend from the levels indicated, roughly in the ~1840-1820 price area (highlighted in yellow). This is a proprietary quantitative model that analyzes thousands of S&P500 retracement patterns all the way back to the 1950s and is telling us, based on previous, similar, statistical behavior that happened countless times in history, that the bottom is already in, the odds to have a bottom in this price area (~1840-1820) if reached, range from 78.02%to 100%, so it’s a pretty clear signal.
If we look at the MONTHLY column on the right hand side of the table, we can see a 1656 level with 100% odds, that would be the wet dream of the Bears but is going to be VERY hard to reach such an extremely oversold level and 1822 is already VERY OVERSOLD (95.24%) and has been reached already 6 weeks ago (in fact the market rebounded from that area…).
Overall, it does not seem to us that there is much room left to go for a Bear Market from current levels, maybe a re-test of the lows, if you are lucky.
If you are LONG, hold, the market may go higher from here.
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