Go No Go Charts show market bottoms?
The term “go/no go” refers to the pass/fail test process that NASA flight controllers perform to monitor the various systems for operation and readiness before a spaceflight mission launch can proceed.
Investing in the stock market is also accompanied by uncertainties and indecisions. Trading involves evaluating the upside potential to the downside risk taken.
The people at GoNoGo Charts have developed technical indicators that help traders and investors better process the trading data and make informed decisions.
GoNoGo Charts indicators revolve around the concept that momentum goes hand in hand with trend analysis.
The velocity of price change identifies the dominant trend and the sustainability and conviction level of the trend.
Rising momentum signals the continuation of an uptrend, and declining momentum warns of a weakening trend or an impending trend reversal.
Trend identification is the single-most-important part of technical analysis. Merging statistical analysis (velocity of price change) with the basic principles of technical analysis (trend identification, momentum, etc.), the GoNoGo technical indicator via visual color prompts determines if the market or security is ready to “Go” (buy) or “NoGo” (delayed buying).
Many technical indicators are complex due to the mathematical models involved and are open to various interpretations. GoNoGo Trend indicators simplify decision-making, with only two signals – Go (buy) or NoGo (delayed buying).
When the trend is the strongest, it notifies the trader by painting the price bar blue.
When slightly less bullish, the color turns to aqua.
Amber bars represent an uncertain or no trend, often occurring when the trend transitions from bull to bear and vice versa.
Pink bars denote bearishness, and dark purple when the bearish trend accelerates.
SPX GoNoGo update:
On 1/4/22, a blue bar appeared (Weak Go). In hindsight, it signaled the top in the market and the start of a cyclical bear decline.
After sustaining an aqua (weak Go) and blue bar (Strong Go), pink (No Go) and dark purple (Strong No Go) consistently appear into Jan-Mar 2022.
In late-Mar 2022, aqua and blue bars signal the start of a recovery. However, the rally stalled as pink and dark purple bars reappeared.
The late-Apr 2022 to Jun 2022 was brutal as the bars remained in dark purple and pink bars throughout the 2-plus month selloff.
Another oversold rally appeared soon after SPX cleared the 50-day ma (green) in late-Jul 2022, as evidenced by bright blue and blue bars.
The failure to surpass the Jan 2022 downtrend (black line) and the 200-day ma (red line) in Aug 2022 warned of the resumption of a cyclical bear.
The Aug 2022 peak quickly led to another series of pink and dark purple bars resulting in the 10/13/22 low as SPX traded below the 50-day ma.
From Oct 2022 low, a higher low developed in early Nov 2022. The breakout above the declining 50-day ma quickly generated another blue bar.
Unfortunately, the recovery faded in early Dec 2022 as SPX failed near the 200-day ma and the 2022 downtrend, prompting another decline.
Another higher low in late-Dec 2022 coupled with a surge above the 50-day ma hint of an SPX recovery.
In late-Jan 2023 the ability of SPX to surge above its Jan 2022 downtrend and a golden cross buy signal led to a series of blue bars.
The Mar 2023 pullback created yet another higher low further reinforcing Oct 2022 as a pivotal market bottom.
In Apr 2023, blue bars developed, suggesting the start of another recovery. Is this a sustainable rally that finally confirms the bottom?
One interesting point worth mentioning. The two recent rallies (blue and bright blue bars) have occurred above the Jan 2022 downtrend.
The ability of SPX to maintain above the rising 50-day ma and the flat 200-day ma hint at a sustainable intermediate-term recovery.
Watch the 2/2/23 high (4,195.44), as the ability of SPX to breakout reinforces a higher-high pattern and suggests a retest of the Aug 2022 reaction high.
Above 4,325.28 (8/16/22 high) confirms the May 2022 head and shoulders bottom breakout and solidifies the 10/13/22 low as a market bottom.
Below are the current GoNoGo signals for SPX, INDU, NYA, COMPQ, and NDX.
SPX: NoGo bars (blue bar on 4/17/23)
INDU: NoGo bars (blue on 4/17/23)
NYA: NoGo bars (blue on 4/17/23)
COMPQ: NoGo bars (blue on 4/17/23)
NDX: NoGo bars (blue on 4/17/23)
All indexes reside in blue bars (Go signals) and are trading above their respective 50-day and 200-day moving averages. Golden cross buy signals as the 50-day ma cross above the 200-day ma hint of trend reversals, favoring higher prices. All have broken out above their respective down trends, except for COMPQ and NDX, which are close to reversing their primary downtrends.
The above favorable technical signals bode well for confirming the Oct 2022 lows as market bottoms. However, further technical work is necessary to solidify the Oct 2022 lows. Surpassing the Feb 2023 highs and, preferably, the Aug 2022 reaction highs reaffirm the bottoms and reverse the downtrends.