A pullback, or the start of a lasting decline?
This seems to be the question of the day, given the brutal price action of the past several sessions. My expectation, since the SPX reversed below 5446 on July 24, was for a deeper pullback to develop, reaching 4953-5263. Bounce off late July low remained below critical resistance of 5585, producing such downside followthrough. On August 1, I identified a support level of 5130 as ideally containing this decline. So far, SPX bottomed at 5119, only momentarily breaching that support, and is attempting to hold it. So, what now?
My work with the SPX chart, as well as my analysis of a proprietary blend of broad risk on/off indicators which among my clients is known as "the tea leaves", favors SPX to hold its April low (4953) and produce further upside, ideally reaching over 6000. To make it likely that this correction completed, SPX needs to rally over 5566.
As a technical analyst, my role is not only to share my view on what I see as the more likely option, but to do so along with highlighting key levels break of which would suggest that I may be wrong. A break of 4953 would be such level; below it would be the earliest indication of a potential top, with a stronger indication below 4607.
Technical Analyst | Trader
6 个月Practically, as traders or money managers, we don't need to know the future. It's enough to be able to identify low-risk entries with clear risk parameters, and then manage the position once it's in the money. So, whichever of the two paths it may choose from here, practically, bullish proved to be the right call on August 6, when the original post was made.
Technical Analyst | Trader
6 个月Action off the August 5 low is developing bullishly, as expected. At this time, I'm viewing it as bullish for as long as it can hold 5330; below it, stance becomes uncertain, and turns bearish below 5195.