There’s been quite a bit of speculation about a possible bear market low having just been made at the last low, and that is technically possible, though I think rather unlikely. More likely is the possibility that SPX is returning to retest the all time highs to make a second high on a huge double top pattern looking for a retest of the 2020 lows, but even that is doubtful in my view. I think that if the high had been going to get a retest then the rally that ended at 4326.28 would likely have continue higher into that then.
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Holding The SPX 200 Week MA
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I was looking at the possibility on Friday of a decent rally from strong support in the 3600 SPX area, and that rally may well have started. On the SPX daily chart both RSI 14 and RSI 5 buy signals have fixed yesterday and there is a clear bottoming pattern here that could take SPX back up into the 3885 area on a sustained break back up over 3736.
(more…)Quarter Pounder
Friday was, neatly, exactly the last day of the quarter, and we kick off the final quarter of this so-far glorious year on Monday. Let’s look at a variety of important ETFs using quarter bars (each bar represents a full three months, instead of the typical single day0 to get a crude, long-term picture as to where the markets stand. As always, click on any chart for a bigger version, determined by the size of your screen.
We begin with commodities which, thank largely to oil and precious metals, has traversed to the bottom of its multi-year ascending channel. What we want to see next here is a break, which I am anticipating will happen thanks to continued weakness in commodities.
Testing The 2022 Low
Last week I was looking for a new low on SPX for 2022 and we’ve seen that week. I was also wondering about a possible rally after that and SPX has been setting up nicely for that rally, even with news this week that has mainly been grim. Nonetheless it is a decent looking setup for a rally here, so I’ll have a look both at that and the obvious next target below in the event that this rally setup fails.
On the rally prospects side the new low and retest of that low has created a very decent quality potential double bottom setup that using the lows at the time of writing would look for the 3850 area on a sustained break over 3736.74. The retest has also set up positive divergence on the daily RSI 14 and RSI 5. Given that there is similar divergence on NDX and still an open hourly RSI 14 buy signal fixed, that is a lot of potential and actual support for a rally here.
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