Hello traders and investors! Let’s see how the SPX is doing today!
The volatility is quite high, thanks to the Quad Witching, but we can find some sense of this crazy market using Price Action.
The SPX it is doing a Double Bottom chart pattern in the 1h chart, but the situation is still delicate. If it loses the previous support, then it’ll ruin the pattern and the index will become slightly bearish for the next few days.
However, if it reacts near this double bottom, it’ll resume the bullish momentum in the daily chart. Speaking of daily chart:
It is frustrating because we are losing the purple line for the first time. Maybe the 6th time is the charm, as we thought. However, keep in mind that we are losing the trendline without bearish structure. Again, only if we lose for good the support at 4,435 in the 1h chart we might see a bearish reaction lasting for a few more days.
Surely, the bull trend got weaker, but this is all we can assume for now. Since it is Quad Witching day, I prefer to wait for more confirmation next week.
If you liked this analysis, remember to follow me to keep in touch with my daily updates! See you on Monday.
Nathan, in your previous post on SPX, you recommended waiting for a (upward) reaction before making any new buys. Didn't the upward move on 15 Sept qualify as a significant bullish reaction? If not, what was missing from the reaction on 15 September?
Nathan_Black
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@BlkGold, almost! What we missed was a clear bullish structure in the 1h chart. I give updates about my thoughts every Monday on video. I recommend following me on YT as well.
Have a great weekend!
merkd1904
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This could be a lot of things but double bottom isn't one of them.
"Second Trough: The decline off of the reaction high usually occurs with low volume and meets support from the previous low. Support from the previous low should be expected. Even after establishing support, only the possibility of a Double Bottom Reversal exists, and it still needs to be confirmed. The time period between troughs can vary from a few weeks to many months, with the norm being 1-3 months. While exact troughs are preferable, there is some room to maneuver; typically, a trough within 3% of its predecessor is considered valid."
In general you want a double bottom to make an even or higher high, at worst a marginal new low. Thus the name double bottom Today's low was not marginal in my opinion, it was a lower low. And going off of volume this move is just starting to gain legs.
hourly:
SPY and ES look markedly worse, especially with the liquidation break shortly after the bell in ES, and volume in SPY was the highest since our last breach of the 50 period SMA (your purpple line). That was bought the next day and closed back above, but the daily closes are completely different for we closed back above the 50 period back in June. We have closed below the 50 period SMA three times this year (Jan, March June), and all three we closed back above the very next session. It really is going to be up to the overnight session Sunday and where they price us Monday morning.
This is all going into Fed Day on Wednesday as well.
Nathan_Black
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@merkd1904, don't worry, over the years you will learn to don't care too much about small details. You must understand that PA is an art, not an exact science.
I'll give you guys more details on my Monday video on YT. I recommend watching it!