Daily & weekly charts of SPX
SPX daily is on plan as it takes out the next resistance level and looks to fill the open gap at 4219. It would be so simple to call ‘bear market back on’ at that point because we really want to see a lower high to the August high of 4325 to keep it comfortably in the bear camp. Our original objective was to rally to a lower high to 4219.
But you may recall the weekly chart pattern I imagined in this public post back in December (beauty, eh?). Well, it is activating by breaking its neckline, which also served as the trendline from the top a year ago. So the other alternative is that we get a hell of a bear market rally, shake out the bears, suck in the FOMOs (happy days are here again!) and then resume the bear market. Of course, a third option is “bear market over”, but that is a distant third in my opinion.
As to the chart, the neckline is sharply sloped down and hence its measurement is ‘only’ to the 4700 area, which could constitute a double top. If the market were to make a double top of that magnitude I would not want to be anywhere near the bull side of risk ‘on’, cyclical stocks after that point. This is all just an FYI to the status of the bull rally. Remember, we were on this bull theme long before most. So I am not talking a bearish book on the future. Just talking probabilities as I see them.
