Nathan_Black

SPX: A new record high! Should we be nervous about it?

SP:SPX   S&P 500 Index
Hello traders and investors! Let’s see how the SPX is doing today!

Once again, we have a new record high on the SPX , and this was already expected. I thought we were going to see another pullback, at least in the 1h chart, but it seems the bears can’t stand against the momentum. But should we be nervous about it? Well, let's see what technical analysis has for us.

This movement corroborates with the 6th tenet of the Dow Theory: Trends persist, until a clear reversal occurs. So far, we had no reversal sign around, only pullback signs.

We dropped sharply to the previous support at 4,289 (even went a little bit below this point), but this was a just a false breakout.

Could the SPX drop again? Of course, but there’s nothing telling me that it’ll. The key point that could make it drop more is the 4,393. If the SPX closes under it today, or does a bearish candlestick in the beginning of next week and closes below it as well, then we might see another pullback.

The intensity of this possible pullback is unknown. We could retest the 21 ema and quickly recover, or hit the purple trendline (we would need to see a stronger bearish structure in the 1h chart for this).


Truth be told, it has been some time since we didn’t touch the 21 ema in the weekly chart. If the index corrects to such a point, keep in mind that the long-term trend would still be bullish , as we still would have higher highs/lows.

For now, we can just assume the trend will persist, and wait for a clear reversal sign, as Charles Dow, the father of Technical Analysis , wisely advised us to do, nearly one century ago.

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Have a good weekend!
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Comments

I have missed a lot being fearful. All in from now to the end of QE. LOL..
+2 Reply
Nathan_Black tradingpro
@tradingpro, I've been there as well. The key to not miss due to fear is to rip your emotions away by letting the charts to guide you. I have my opinions, yes, but the charts are more importants than what I think or feel about the market.

I wish you the best of luck!
Have a good weekend!
+4 Reply
perfect perfect. great target
Reply