SPX closed with a small pin bar on huge volume last Friday, coupled with a potential bullish divergence between price and RSI (daily chart), it Looks like we can expect yet another bounce soon. However, divergence usually result in a short term reversal (lasting 2 or several candles) and may not translate into a longer term trend reversal.
The last 3 weekly candles of SPX has formed a broadening "pennant", a pattern that signify a market that has been highly volatile with little to show in direction in the last 3 weeks.
So while we may expect some bounce next, it is probably just more whip saws in the near term, especially when most of the market leaders (mostly the MAANGT stocks are still weak (except perhaps NFLX and TSLA) aren't showing signs of having bottomed yet.
While there may be some stocks that have started to break up from base formations, only a handful are able to successfully trend up without too much volatility.
Let's wait for S&P be able to rise above the longer term resistence line (red) eventually, then perhaps we will have a more sustainable market recovery. Meanwhile, stay safe.
Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
Good work, I totally agree with this conclusion / cautionary statement you made: "Let's wait for S&P be able to rise above the longer term resistence line (red) eventually, then perhaps we will have a more sustainable market recovery. Meanwhile, stay safe"
There will be a good time to buy, but it requires patience, which is so challenging for traders / investors!
Thanks for all your interesting comments! I guess it's clear that both the bulls and bears are still at loggerhead (mostly, with more bears winning). Yes, we are expecting Fed to raise rates aggressively and all, the question is whether these expectations have been built into the current prices. We won't have any impactful economic reports coming out until this Thursday and that should give us a good hint where the market is going next (still shorter term). Remember the market always move ahead of fundamentals, so we won't wait till we are officially "out of recession" to stake, but try to use TA could give us this edge (whip saws are the hardest). The (astute) short term traders would love this whipsaws. Appreciate all your feedback.
Last Friday was triple witching housecleaning := " huge volume". Very interesting, possible exhaustion-gap, island reversal ??? Futures suggest more pain .... Thank you for your contribution ...
Juliac
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@Oh_If_Only, you are right about the huge volume being largely in part due to Quad (not even Triple) witching las Friday! I won't read too much into pre-market futures (unless it's making huge directional moves of at least 1.5%).
There will be a good time to buy, but it requires patience, which is so challenging for traders / investors!