My first idea, comment if you think I'm onto something or if you think I'm dead wrong.
Since the S&P500 high in January 2022, RSI-50 began fluctuating between low 40s and high 50s. Each RSI-50 interval takes 70-80 bars. Each low and high can be associated with a strong rally or strong drop in the S&P price in the days following the RSI peak/valley. So far, this pattern has occurred twice. Should this pattern continue, I expect the S&P500 rally to continue and reach a local maximum around 4090 in late November or early December. Also at that time, the RSI-50 will be in the low-to-mid 50s, also a local maximum. Then, I expect a drop over the next 45 days where the S&P will lose 17% and hit 3390. RSI-50 will drop to 40 but may continue to decline, along with the S&P price. I expect the S&P to hit 3390 on Friday, January 13, 2023....Friday the 13th, mind you.
If I decide to move forward with taking a position, I will enter when RSI-50 hits 52 and put a trailing stop loss in once RSI-50 hits 43. That way if a rally follows, I can keep most of the gains, but can also keep riding should the price continue to decline. I am looking at buying SH, SDS, and/or SPXU when the time comes.
This idea is not investment advice. Good luck.
Since the S&P500 high in January 2022, RSI-50 began fluctuating between low 40s and high 50s. Each RSI-50 interval takes 70-80 bars. Each low and high can be associated with a strong rally or strong drop in the S&P price in the days following the RSI peak/valley. So far, this pattern has occurred twice. Should this pattern continue, I expect the S&P500 rally to continue and reach a local maximum around 4090 in late November or early December. Also at that time, the RSI-50 will be in the low-to-mid 50s, also a local maximum. Then, I expect a drop over the next 45 days where the S&P will lose 17% and hit 3390. RSI-50 will drop to 40 but may continue to decline, along with the S&P price. I expect the S&P to hit 3390 on Friday, January 13, 2023....Friday the 13th, mind you.
If I decide to move forward with taking a position, I will enter when RSI-50 hits 52 and put a trailing stop loss in once RSI-50 hits 43. That way if a rally follows, I can keep most of the gains, but can also keep riding should the price continue to decline. I am looking at buying SH, SDS, and/or SPXU when the time comes.
This idea is not investment advice. Good luck.
Comment:
RSI-50 sitting at 49.67 at close. I'm sure hoping it can push up a bit further early next week. I may adjust my entry point based on how Monday and Tuesday looks. With the Fed announcing the rate hikes mid week, I am considering entering a short position sooner.
Comment:
Looks like the drop could happen sooner that I originally anticipated because of the rate hikes. I expect the S&P to follow the current downtrend and hit a new low in December and continue to fall into the new year.