The S&P500 index (SPX) closed its last 1W (weekly) candle above the 1W MA100 (green trend-line) for the first time since May. This has been part of a very strong rally that started after the mid June low. The 1W MA100 has been instrumental in recent decades at deciding whether the index enters a Bear Market or resumes the Bull Market.
As you see on this 1W time-frame chart, during the 2001/02 and 2008/09 Bear Cycles, S&P500 failed to break above the 1W MA100 upon a rebound test (January 2001 and May 2008) and eventually got rejected in a Bear Market. In fact in May 2008 the rejection was more clear on the 1W MA50 (blue trend-line), which is currently the Resistance level that the index is testing this week. If it fails here again, we can get a repeat of those Bear Cycles, where the price dipped -44.40% and 52.60% respectively from the 1W MA100 rejections. A -52% sell-off would put the index exactly where the 1M MA200 (red trend-line) is right now (around 2100).
On the other hand, every other time that the SPX broke above the 1W MA100 and successfully held it, the price rallied (from the level of break-out) in the coming months/ years from a minimum of +23% (February 2019 - February 2020) to a maximum of +80% (October 2011 - June 2015) before it ran into another market top. In today's terms, that would be a minimum of 5100 (+23%) and a maximum of 7450 (+80%) from last week's 1W MA100 break-out point.
@louistran_016...I usually go for SPXU on swings, and bought some yesterday.
Note: I do believe further fake out pumps could be ahead, but a 23% rally from here, given the fundamental and macro environment, is insane.
louistran_016
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@Imdmagic1, i'm short term bullish long term neutral, looking at SQQQ and SPXS everyday both of them are in no man's land. Therefore the indexes with bullish MACD can absolutely go higher. Word of advice, do not DCA into short position, do a lump sum, get in and out quickly
Imdmagic1
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@louistran_016, ... the rub, as always, is how we define "term". I have short term as weeks to months; long term as quarters to years. Seems like this market is all hours and days.
slackmiles2019
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Thanks for the analysis... however, I think it will push towards the MA200,, as it was already near it on 2008/2009. This scenario is 'end of world' I know... but the distance of MA200 is too big, it needs to push back in some point...
Solldy
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The description is not the most complete, but the schedule itself is very good. Did you consider any news when building the chart?
juveparmalat
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looking at NKD (all emas bullish and trying to retest Sep 21 as minimum if not even a bkt out), FTSE as well following same path, AAPL continuation here can brk out ATH, and a lot of others instruments in their respective impulsive wave iii of 3's, the bias is more to the bullish case with SPY probably retesting March highs as a minimum if not ATH.