Be prepared for large sell off of $SPX around 4350 level
The moving average 300 is an indicator of trends for the S&P 500, and prices often tumble to it during bull market rallies or bounce to it in bear market rallies. Currently, $SPX is making a push towards the moving average 300, which is currently‘ at 4350.34. At this level, the volume histogram indicator across a 200 day timeframe and 500 day timeframe shows that there was historically a very high volume executed, which indicates that this may be a critical point for the market, and lots of volume may happen when it is reached.
Given that US markets are now in a recession, as dictated by two quarters of negative GDP growth, the war is still ongoing, and inflation rates are still high, I'd personally guess that the current rally is a bull market trap, which will reach the MA 300 then experience large volume and reverse downwards.
Comparing the current situation to two crashes, 2008 and 2020, I'd say that the state of the market is more similar to 2008, where prices came close to the ma 300 then crashed, instead of 2020, where the stock market rallied strongly after crossing over the moving average 300. This is because, in 2020, the rally after the crash was largely fueled by the federal reserve's quantitative easing and asset buying, whereas now in 2022, the federal reserve's actions are on the opposite end, with "quantitative tightening" and rate hikes.
Given that US markets are now in a recession, as dictated by two quarters of negative GDP growth, the war is still ongoing, and inflation rates are still high, I'd personally guess that the current rally is a bull market trap, which will reach the MA 300 then experience large volume and reverse downwards.
Comparing the current situation to two crashes, 2008 and 2020, I'd say that the state of the market is more similar to 2008, where prices came close to the ma 300 then crashed, instead of 2020, where the stock market rallied strongly after crossing over the moving average 300. This is because, in 2020, the rally after the crash was largely fueled by the federal reserve's quantitative easing and asset buying, whereas now in 2022, the federal reserve's actions are on the opposite end, with "quantitative tightening" and rate hikes.
Comment:
SPX is down -0.86% so far today, after reaching a level slightly below 4350, with a high at ~4325. Whether this is the beginning of a downturn, or the market will maintain its bullish trading channel will be confirmed in the next few candles.
Trade active:
I opened a position on $SARK to profit from a decline across major indices on the 18th of August, which is performing quite strong. Some support may come in around 4150, but if that is pierced through, I expect that the market will go down to the bottom end of its current broadening descending wedge, which would mean major downside is in it for the market.