SPX Go No Go Charts suggest a "Go"
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 often accompanied by uncertainties and indecisions. Trading involves evaluating the upside potential to the downside risk taken.
The folks 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 helps identify the dominant trend and the conviction in the sustainability of the trend. Rising momentum signals the continuation of an uptrend. Declining momentum warns of a weakening trend or an impending trend reversal.
Trend identification is the single-most-important part of technical analysis. By combining 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. The GoNoGo Trend indicators simplify the decision-making process 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 bright 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.
Despite another 75-basis point rate hike from the Fed, continued geopolitical turmoil in Europe, and high inflation, US stock market indexes have been resilient.
The question remains – is this another bear market counter-trend rally (dead-cat bounce) or a bottoming process (consolidation) leading to the resumption of the structural bull trend?
Enclosed is a summary of the updated GoNoGo Chart on the S&P 500 Index (SPX).
Last week on 7/21/22, the color chart bar turned to aqua (weak go or moderately bullish trend).
In subsequent days, the bars remain aqua for a couple of days. It briefly turned amber (no trend or neutral trend) on Tuesday, 7/26/22.
On Tuesday, SPX also touched its 50-day ma (currently at 3,920.78) and strongly rebounded the next day.
Yesterday, SPX broke out above its Mar 2022 downtrend and closed its 6/10/22 gap-down.
Today, the chart bar turned blue color (strong Go or strong bullish trend) for the first time since late-Mar to early-Apr 2022.
Is this a valid "Go" signal and the start of a sustainable SPX bull run toward the 200-day ma a 4,411?
Or is this like the previous false "Go" signal from late-Mar to early-Apr 2022?
Next week or so is crucial as pullbacks will help to determine if this is indeed a "Go" or buy signal.
A successful test of the extension of the downtrend breakout (4,017) and 50-day ma (3,921) bodes well for the continuation of the 6/17/22 summer rally.
Secondary support rises to 3,768 (Jun 2022 uptrend) and below this to 3,721.5 (7/14/22 higher low) and then 3,636.87 (6/17/22 reaction low).