The S&P 500 has ended nearly two-month losing streak with a +6% gain this week, 4.5% of which came on Thursday and Friday alone which is a good sign going into a long holiday weekend. It means that traders are comfortable buying at current prices and are expecting the uptrend to continue next week.
As for the technicals, the SP500 has broken above a downtrend line(red) which acted as hard price resistance for all of May and the breakout this week is a sign that stocks are attempting a price reversal. Price also broke above a local high(dashed yellow) made back on May 18th which was the last time price was rejected at the red downtrend line prior to this weeks breakout. Price also crossed and closed above the 38.2% Fibonacci retracement level today which is another indication that price is attempting to turn bullish. When price is trading between the 0-38.2% fib levels(purple) the overall price trend is considered bearish. When price is trading between the 61.8-100% fib levels the overall price trend is considered bullish.
The lower indicators are showing short-term bullish momentum to confirm the bullish price action seen this week. The PPO indicator shows the green PPO line above the purple signal line, and both lines rising, which short-term bullish momentum behind price. Both lines are below the 0 level though which indicates that the intermediate to long-term price momentum remains bearish.
The TDI indicator shows the green RSI line rising and above the 50 level. Above the 50 level is bullish, but for sustainable bullish momentum a reading above 60 is preferred. The green RSI line is also above the upper of the 3 purple Bollinger Bands which indicates bullish volatility, and in general you want to hold as long as the RSI line is above the upper Bollinger Band. Short-term the TDI is reading bullish momentum behind price, but the intermediate to long-term momentum won’t shift until the center Bollinger Band is above 50, it currently is at 40.
Overall the short-term trend reversal in the SP500 this week looks good and I’m anticipating a move higher next week. The main level I'll be watching is the 50% fib at $4219, a move above there would indicate that this reversal has legs.
As for the technicals, the SP500 has broken above a downtrend line(red) which acted as hard price resistance for all of May and the breakout this week is a sign that stocks are attempting a price reversal. Price also broke above a local high(dashed yellow) made back on May 18th which was the last time price was rejected at the red downtrend line prior to this weeks breakout. Price also crossed and closed above the 38.2% Fibonacci retracement level today which is another indication that price is attempting to turn bullish. When price is trading between the 0-38.2% fib levels(purple) the overall price trend is considered bearish. When price is trading between the 61.8-100% fib levels the overall price trend is considered bullish.
The lower indicators are showing short-term bullish momentum to confirm the bullish price action seen this week. The PPO indicator shows the green PPO line above the purple signal line, and both lines rising, which short-term bullish momentum behind price. Both lines are below the 0 level though which indicates that the intermediate to long-term price momentum remains bearish.
The TDI indicator shows the green RSI line rising and above the 50 level. Above the 50 level is bullish, but for sustainable bullish momentum a reading above 60 is preferred. The green RSI line is also above the upper of the 3 purple Bollinger Bands which indicates bullish volatility, and in general you want to hold as long as the RSI line is above the upper Bollinger Band. Short-term the TDI is reading bullish momentum behind price, but the intermediate to long-term momentum won’t shift until the center Bollinger Band is above 50, it currently is at 40.
Overall the short-term trend reversal in the SP500 this week looks good and I’m anticipating a move higher next week. The main level I'll be watching is the 50% fib at $4219, a move above there would indicate that this reversal has legs.