top of page
Search

GoNoGo Update

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 (daily data) short-term interpretation:


From a near-term perspective, the SPX daily candles shifted from the amber color (no trend) on 11/3/23 to an aqua bar on 11/6/23, signaling an SPX recovery. Today, on 11/14/23, a blue price bar suggests a Go (buy).

The Go signal (blue bar) today (11/14/23) comes soon after SPX has found a bottom at 4,103.78 (1027/23), rebounding from the pivotal 61.8% retracement (from Mar-Jul 2023 rally). It is also important to mention that today’s gap-up breakout coincides with the Jul 2023 downtrend (4,407) and the 61.8% retracement (4,414.81) from Jul-Oct 2023 decline. The fourth gap-up (11/14/23) in the past month is remarkable after a half dozen negative outside days in the past few months. The bullish daily development signals an SPX rally toward next resistance at 4,499-4,541.25 (78.6% retracement from Jul-Oct 2023 decline and the 9/1/23 high) and above 4,607.07 (7/27/23 reaction high). An overbought condition (RSI = 67.79) is developing into the 10/27/23 rally, suggesting the potential for a near-term pullback in the days/weeks ahead. The pullback is likely to find trading support near the 11/14/23 gap-up (4,421.76-4,458.97) and below the 50-day ma (4,336) and 11/3/23 gap-up (4,319.72-4,334.23). Strong support remains near the 11/2/23 gap-up (4,245.64-4,268.26) and the 200-day ma (4,215).


SPX GoNoGo (weekly data) intermediate-term interpretation:


From an intermediate-term perspective, the SPX shows a blue bar (Go) after generating a brief uncertain or no trend (amber color) on 10/27/23.


The 10-week ma (4,330.55) nears a critical test of the 30-week ma (4,313.24), signaling an impending intermediate-term inflection. A successful test of the 10-week ma, rebounding from the 30-week ma, reaffirms the bullish intermediate-term uptrend. However, the 10-week ma crossing below the 30-week ma warns of a death cross-sell signal and an SPX decline. Interestingly, four (4) successful tests of the 10-week ma trading above the 30-week ma occurred in early 2012, last 2012, late 2016, and early 2018. Each bullish occurrence leads to near-to-intermediate-term SPX rallies.

The weekly SPX chart also shows a converging triangle pattern developing since the Jan 2022 peak (4,818.62) and the Oct 2022 bottom (3,491.58). The coiling pattern typically leads to an impending breakout or breakdown. Above 4,567 and preferably above 4,607.07 (7/27/23 lower high) confirms an SPX triangle breakout and suggests a retest of 4,818.62 (1/4/22 all-time high). Below 4,128 and 4,103.78 (10/27/23 higher low) confirms a triangle breakdown and warns of a retest of 3,808.86 (Mar 2023 low) and below 3,491.58 (Oct 2022 reaction low).


SPX GoNoGo (monthly data) long-term interpretation:


The amber bar (Nov 2023) hints that investors are confused and uncertain of the next SPX directional trend. However, except for the brief 1-mo amber bar in Sept 2011 and Mar 2020, SPX has consistently maintained blue (Go) and aqua bars (moderate bullish), suggesting the May 2013 structural bull remains intact.


Despite the Jul to Oct 2023 and the recent Sept to Oct 2023 pullbacks, SPX has maintained above two pivotal uptrends – the 2009 uptrend (3,252) and the 2009/2011 uptrend (3,966), confirming an ongoing structural bull trend. Also, SPX has recently rebounded from the 10-mo ma (4,295) and the 30-mo ma (4,179), as both longer-term moving averages continue to trend higher.


Although further testing of the 10-mo and 30-mo moving averages is possible, the above favorable technical developments strongly suggest the May 2013 structural bull has legs.


A surge above the Jul 2023 reaction high (4,607.07) and preferably above the Jan 2022 all-time high (4,818.62) would further confirm the resumption of the structural bull trend.


Conclusion:


The daily GoNoGo chart shows a blue bar (Go), suggesting the Jul-Oct 2023 decline may have been a pullback. A convincing move above 4,607.07 (7/27/23 high) would confirm the Oct 2023 low as a market bottom and solidify a year-end to early 2024 rally.

The weekly GoNoGo chart also shows a blue bar (Go). The converging 10-week and 30-week ma and the triangle pattern suggest an inflection point. Above 4,567 and preferably above 4,607.07 (7/27/23 lower high) confirms an SPX triangle breakout, reinforcing a retest of Jan 2022 all-time (4,818.62). On the other hand, below 4,128, and 4,103.78 (10/27/23 higher low) confirms a breakdown and warns of a retest of 3,808.86 (Mar 2023 low) and below 3,491.58 (Oct 2022 reaction low). Also, a golden cross or death cross will help decide the next intermediate-term trend.


The monthly GoNoGo chart shows an amber bar (neutral), suggesting investors are confused or uncertain about the longer-term direction of SPX. However, previous amber bars (Sept 2011 and Mar 2020) were temporary developments that resulted in the continuation of the structural bull.


Also note the structural uptrends, coinciding with the 2009/2011 and 2009/2020 uptrend channels, remain firmly intact. Although the structural bull is ten (10) years old, the longer-term trend can continue as structural trends in U.S. stocks can last for 8-20 years, possibly placing the current structural bull trend at the halfway mark.


Nonetheless, it is reasonable to expect corrections and even cyclical bear declines within a structural bull. The 10-mo and 30-mo moving averages at 4,295 and 4,179 offer key initial support. The 2009/2011 uptrend at 3,966 provides intermediate-term support, and the 2009/2020 uptrend at 3,252 provides longer-term support.


(SPX Daily Chart) Source: Chart courtesy of StockCharts.com

(SPX weekly) Source: Chart courtesy of StockCharts.com

(SPX monthly) Source: Chart courtesy of StockCharts.com


44 views0 comments

Recent Posts

See All

Closing of the Newsletter

Dear clients, After four rewarding years, the time has come for me to close the Lee Technical Strategy Newsletter, effective today. I want to take this opportunity to let you know what a great honor a

Technical Review of the Top 25 NDX 100 Index Stocks

NASDAQ 100 Index (NDX) – NDX is a modified market capitalization-weighted index comprising 100 of the largest non-financial companies on the NASDAQ Composite Index (COMPQ). NDX is heavily weighted tow

Comments


bottom of page