A super simple update using the daily chart that has appeared in NFTRH over the last several weeks. From NFTRH 553…
“The market can bounce this week to fill the gap it left last week but this thing has been hit with an ugly stick. If it bounces I think I will add to short positions using the SMA 50 as the resistance parameter. Meanwhile, the key bear parameters are shown at 2815 and 2776.”
The market made an early bounce attempt yesterday before reversing back down. Today it has sheared through the first support (the green shaded zone surrounding 2815) and is now testing the 2nd one (the SMA 200 at 2776). You may recognize the candle as a Hammer, which would be bullish for a potential bounce if it can maintain through the day.
Here is the thing; SPX left a gap as it dropped from the SMA 50 last week and I would not discount any bounce that comes from the SMA 200 as being able to fill that gap. Is a bounce assured? No. Is this a place where it could happen? Yes, although there remain two conspicuous gaps lower as well.
Recall also that we speculated about the alternative shoulder on the left and a would-be bounce from the SMA 200 creating a neckline to that and an alternate right shoulder yet to be formed.
Okay, I am making the simple less simple now. Apologies. Just trying to outline some of the short-term scenarios. The stock market is intermediate bearish until it retakes the 50 day average and the right shoulder (S). But it is not broken until it loses the SMA 200 and closes below it for a few days in a row.