S&P500 Update: The futures are now pushing into a minor resistance zone between 2710 and 2746. This is a more attractive area for selling and serves as a very convenient location for bearish catalysts to affect the market.
We are in the middle of earnings and ongoing geopolitical drama. Two highly potent sources for bearish catalysts. If a bearish reversal pattern appears within the 2710 to 2746 resistance zone (.618 area of recent bearish swing), then price can reasonably retrace back to the 2652 level (.382 of current bullish swing) before it finds support.
Keep in mind, if negative news happens to come out, it usually gets all the blame for the resulting bearish price action. As you can see on this chart though, price is already in an area that would be more attractive to bears to begin with. Often news catalysts drive price along the path that is was going to take anyway, just much faster.
So what can we gather from this chart within the context of this environment? The stock market is vulnerable to selling as a whole, and all it needs is a spark to start the party. This does not mean price can't break higher on a positive catalyst, it's just that market structure points to more potential on the short side at such a level.
On S.C. we cover stocks and options trades and use the S&P as a helpful gauge when it comes to broader market timing and relative strength. You can see recent trades on our Stocks and Options performance sheet.
Marc what do you think about the stock market in the medium term of 2-3 years, people are always talking about the next big crash, but I don't think we are near to it yet. I for one look forward to your stock market posts as a whole just as much as Bitcoin, if not more given how stagnant BTC is right now.