After the aggressive sell off this week, the media is in a frenzy talking about how the bear market is finally here. I personally disagree with that assessment and here is why.
A bullish trend consists of higher highs and higher lows. A bearish trend consists of lower highs and lower lows. Looking at the chart above, it's clear that we're still in a bull market, although we're on the brink of making a lower low.
Until we make a lower low and hold below that level, it's a bull market and should be seen as one. Many believe that that the federal interest rate hike will be the catalyst to a bear market, however in the past stocks only went higher as the interest rate climbed. See the chart below which compares the fed rate (blue) to SPY (orange):
Perhaps this time is different, but until we make a lower low and hold below that level, it's wise to be looking for long setups to develop on the 1hr or 4hr time frame. As it stands right now, there is no trade as the market has been free falling. In order to place a reasonable stop loss, you need a pivot to measure risk against. Until that pivot is put in on the 1hr/4hr chart, it's best to wait until a trade opportunity develops. Remember, it's okay to miss buying the exact bottom as the majority of the trend (which ever way it goes) will make you the most money if you ride it. Wait for confirmation.
If it breaks below 350.32 and holds, forming a pivot, then it's best to look for short opportunities, but I wouldn't recommend anything long term as the market has always gone up consistently over time and as mentioned above, rate hikes are good for the market long term.
Also in regards to the 200 day moving average break (blue line in chart below), if past price action is any indication we should see a retest of the 15000 level soon. It's very rare to break below the 200 day moving average and not retest it a couple days after the break.
Last, in the chart below, you'll see Nasdaq dropped 3.9% after the 200 day MA break during the 2020 Covid crash before coming right back above the 200 day moving average in a retest that followed. After the 200dma retest in 2020, the market continued to go down, but in 2022 I don't think we have as strong as a catalyst to bring the market back below the 200 day moving average, especially when rate hikes have historically been good for the market, but either way wait for a trade to develop.
Good luck with your trades. Please follow and leave a like if you found my analysis helpful.
A bullish trend consists of higher highs and higher lows. A bearish trend consists of lower highs and lower lows. Looking at the chart above, it's clear that we're still in a bull market, although we're on the brink of making a lower low.
Until we make a lower low and hold below that level, it's a bull market and should be seen as one. Many believe that that the federal interest rate hike will be the catalyst to a bear market, however in the past stocks only went higher as the interest rate climbed. See the chart below which compares the fed rate (blue) to SPY (orange):
Perhaps this time is different, but until we make a lower low and hold below that level, it's wise to be looking for long setups to develop on the 1hr or 4hr time frame. As it stands right now, there is no trade as the market has been free falling. In order to place a reasonable stop loss, you need a pivot to measure risk against. Until that pivot is put in on the 1hr/4hr chart, it's best to wait until a trade opportunity develops. Remember, it's okay to miss buying the exact bottom as the majority of the trend (which ever way it goes) will make you the most money if you ride it. Wait for confirmation.
If it breaks below 350.32 and holds, forming a pivot, then it's best to look for short opportunities, but I wouldn't recommend anything long term as the market has always gone up consistently over time and as mentioned above, rate hikes are good for the market long term.
Also in regards to the 200 day moving average break (blue line in chart below), if past price action is any indication we should see a retest of the 15000 level soon. It's very rare to break below the 200 day moving average and not retest it a couple days after the break.
Last, in the chart below, you'll see Nasdaq dropped 3.9% after the 200 day MA break during the 2020 Covid crash before coming right back above the 200 day moving average in a retest that followed. After the 200dma retest in 2020, the market continued to go down, but in 2022 I don't think we have as strong as a catalyst to bring the market back below the 200 day moving average, especially when rate hikes have historically been good for the market, but either way wait for a trade to develop.
Good luck with your trades. Please follow and leave a like if you found my analysis helpful.
My goal is to find the best risk:reward setups. For instance, if you risk $1,000 at a chance to make $5,000, you can afford to be wrong 4 out of 5 times and still not lose money. I hit my targets over 50% of the time.
