SPX Views from Different Timeframes

SPX Daily Chart

2-year Head and Shoulders top or Broadening Top pattern suggests SPX may not be out of the woods in terms of its -35.41% Feb-Mar 2020 bear decline. Key resistance resides along its left/right shoulders at 2,941-3,028 as well as the extension of the top of its broadening trend at 3,117. A breakout here negates h/s top and broadening top and renders a retest of its Feb 2020 all-time high (3,393.52). Major support resides near its neckline supports at 2,192-2,347 (Mar 2020 and Dec 2018 lows). Since the height of the distribution tops is 1,047-1,202 points violation of necklines support warns of the next structural bear.

SPX Weekly Chart

A large weekly gap down during 2/24/20 coupled with a weekly death cross sell signal (3/16/20) led to a SPX bear decline toward a low of 2,191.86 (3/23/20). A deeply oversold condition and a positive outside week on 3/23/20 ignited a strong oversold rally that appears to have faded near 2,954.86 (4/29/20). A potential negative outside week is developing this week (5/11/20). A confirmed negative outside (below 2,793) by the end of the week coupled with a subsequent violation of the 50-day ma 2,713 warns of the start of a deeper correction. On the other hand, a convincing surge toward the upper end of its weekly range (2,946) by the end of the week followed by a surge above its 30-wk ma (3,026) signals the next SPX rally to 3,117 (top of its 2-year broadening top trend), and above this to its 2/24/20 weekly gap down (3,260-3,328.5), and then to 3,393.52 (2/19/20 all-time high).

SPX Monthly Chart

The dominant and prevailing SPX trend since 2009 has been the 10-plus year uptrend channel between 2,700-2,750 (major support) and 3,500-3,650 (major resistance). A negative outside month (Feb 2020) and the violation of the bottom of the 2009 uptrend has led to a bear decline to 2,191.86 (3/23/20 low). The Mar 2020 breakdown below its uptrend channel at 2,500-2,700 remains key support. Both monthly moving average trends (10-mo at 2,981 and 30-mo at 2,843) have begun to turn down. Failure to convincingly surpass this key resistance suggests these moving averages will become long-term resistances on rallies.

SPX Yearly Chart

An outside year (2020) is suggesting an important inflection point for SPX. The ability to rebound from the 10-year ma (2,210.5) as well as the middle of its long-term internal trend line (blue dash line - 2,125) during the Feb-Mar 2020 decline (2,191.86 - 3/23/20) is technically constructive. However, the close at the end of the year (2020) will help to decide the next structural trend for SPX for years and possibly the next decade. Three possible scenarios: (1) resumption of the May 2013 structural bull if SPX close the year at or above the top of its year range, (2) start of a structural bear trend if SPX close at or below the bottom of its yearly range, and (3) neutral sideways trading range if SPX close at or near the middle of its yearly range.

A convincing violation of 2,125-2,210.5 coupled with a negative outside year on 12/31/20 confirms a major top and warns of the next structural bear decline toward the 30-year ma (1,400), and below this to 1,164 (red dash line or the bottom of its long-term yearly uptrend channel). The ability to maintain above 2,125-2,210.5, coupled with a positive outside year can lead to the resumption of the May 2013 structural bull as SPX trends toward the top of its uptrend channel (green dash line - 4,600+). A yearly close near the middle of its yearly range by year-end suggests a neutral sideways trend between 2,125 and 3,400.

Source: Courtesy of

Source: Courtesy of

Source: Courtesy of

Source: Courtesy of

Source: Courtesy of

84 views0 comments