The bear market began in the SPX/SPY/ES on Jan 3, 2022.
After we had a "close to close" greater than 20% I began studying bear market bottoms from a charting perspective. I wrote a post on Aug 17th analyzing every bear market bottoming process on the daily timeframe...if you have not yet looked it over it's worth a gander. I warned the bulls not to get too excited about the June bottom being "the bottom" because the bottoming process didn't make any sense from a charting perspective. My analysis indicated we would, at a minimum, re-test that bottom or make a new lower low.
From a charting perspective today it appears as though we are on our way to re-testing the June bottom in due time.
My thought process remains that a bottom will form when the bulls can "thrust, hold/consolidate, thrust". You can use FIBS or you can visually look at a chart to view the this process. It is widely known from a FIB perspective that holding a .382 retracement before the next thrust will create another large thrust but at a minimum to be "bullish" it really should hold just above the 50% after the initial trust. And this makes sense because so many traders use the 50% retracement rule and therefore when a retracement cannot tag this area after a thrust it typically signifies a bullish thesis.
Above is my updated daily chart of SPX. The orange (non-horizontal) lines are what I consider "thrusts". You can see that these initial thrusts could NOT hold its consolidation and instead broke down. You can also view the open daily gaps...the bulls were expecting a Fed Pivot and therefore when it became clear at Jackson Hole the Fed was not going to Pivot the lower gaps did not make any sense in addition to the bottoming process not making any sense. Hence it became clear to me that we would fill these gaps however we now have gaps above too. (Typically gaps do clear on the SPX unless "news or macro" creates them)
Where are we going from here? The market will lead the way but I am SOH (Sitting on Hands) right now because we are too close to a double bottom, still have lower gaps to fill and I do not see any bullish momentum so SOH just makes the most sense for me. Plus I live in the mountains of Colorado and Sept is my favorite month of the year so until I get a little more clarity I am going to be enjoying the outdoors!!!
After we had a "close to close" greater than 20% I began studying bear market bottoms from a charting perspective. I wrote a post on Aug 17th analyzing every bear market bottoming process on the daily timeframe...if you have not yet looked it over it's worth a gander. I warned the bulls not to get too excited about the June bottom being "the bottom" because the bottoming process didn't make any sense from a charting perspective. My analysis indicated we would, at a minimum, re-test that bottom or make a new lower low.
From a charting perspective today it appears as though we are on our way to re-testing the June bottom in due time.
My thought process remains that a bottom will form when the bulls can "thrust, hold/consolidate, thrust". You can use FIBS or you can visually look at a chart to view the this process. It is widely known from a FIB perspective that holding a .382 retracement before the next thrust will create another large thrust but at a minimum to be "bullish" it really should hold just above the 50% after the initial trust. And this makes sense because so many traders use the 50% retracement rule and therefore when a retracement cannot tag this area after a thrust it typically signifies a bullish thesis.
Above is my updated daily chart of SPX. The orange (non-horizontal) lines are what I consider "thrusts". You can see that these initial thrusts could NOT hold its consolidation and instead broke down. You can also view the open daily gaps...the bulls were expecting a Fed Pivot and therefore when it became clear at Jackson Hole the Fed was not going to Pivot the lower gaps did not make any sense in addition to the bottoming process not making any sense. Hence it became clear to me that we would fill these gaps however we now have gaps above too. (Typically gaps do clear on the SPX unless "news or macro" creates them)
Where are we going from here? The market will lead the way but I am SOH (Sitting on Hands) right now because we are too close to a double bottom, still have lower gaps to fill and I do not see any bullish momentum so SOH just makes the most sense for me. Plus I live in the mountains of Colorado and Sept is my favorite month of the year so until I get a little more clarity I am going to be enjoying the outdoors!!!
Comment:
Today marks Day 1 of a thrust move after we breached Junes low yesterday and now the bottom callers are back..."Double Bottom". The bulls must continue with this thrust for at least another 3-4 days and then they must HOLD the consolidation and not break down like all the other 2022 bottoms and then I'll be a believer. Let's see how this unfolds from here...