In this analysis of SPY, this is the third time in history of SPY (excluding Pandemic black swan event) that the RSI has gotten into the bearish control zone on the monthly chart.
Historically, this only happened in March 2001 and March 2008 before the market capitulated.
In 2001, the market retraced 50.45% from ATH and in 2008 it retraced 57.41% from ATH.
There is a huge volume profile node at around 210 which would be about 56% retracement, in align with historical data.
The Federal Reserve still has at least three rate hikes to go. Furthermore, the quantitative tightening cycle is putting a lot of downside pressure on the market as the fed unwinds their balance sheet.
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To further add:
In March 2001, from the closing price, price rallied up to a wick high over the next 2 monthly candles up 13.66%.
In March 2008, from the closing price, price rallied up to a wick high over the next 2 months candles up 9.56%
A rally over the next two months up to around 392 would be alignment with historical data of a bounce before capitulation begins
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Price rallied to 390 before rejecting after the Federal Reserve hiked interest rates another 75 bps. Jerome Powell said there will continue to be interest rate hikes for the foreseeable future, strengthening the US dollar and will push SPY further to the downside.