S&P500: Still in Bull Market. This is a buy opportunity.

It is always best to keep a long term perspective when investing. Despite being in a correction throughout the whole 2022, the S&P500 index has been giving some very important signs that it has hit a major support level and that it remains within the boundaries of a Bull Market.

To begin with, the index has been trading within a Channel Up (log scale) since March 2009 (the bottom of the previous recession). This chart shows that it has been holding very well up until it broke upwards to the 1.236 Fibonacci level on April 2021 as the market was loaded with trillions of newly issued USD. This caused the index to turn overbought. On the long term, we can view this as a much needed technical correction from an overbought state.

First and foremost, the 2022 correction hit on September, held on October and is rebounding now on the 1M MA50 (blue). This has been the long term support for S&P500 on December 2018 and February 2016, i.e. the Channel's two major corrections before COVID took the market by surprise on March 2020 down to the 1M MA100 (green), which triumphantly supported and caused a massive rebound.

So far the index shows that this is a technical correction within a Bull Cycle. Only if S&P500 closes a month below the 1M MA50, can we expect to visit the 1M MA100 again. And in turn if this breaks as well, which would mean a break below the Channel Up, visit the 1M MA200 (orange), which last held on October 2011. That would push S&P500 into Bear Market zone.


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