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Technical Pictures of SPX

With less than a week before the end of the month (October 2020) and one week before the Nov 3rd Presidential Election day, the daily, weekly, and monthly SPX charts are conveying different technical pictures. Enclosed are technical summaries of SPX from three different technical views.


SPX Monthly Chart


Another SPX outside month has developed during Sep 2020. This will be the third outside months in the past 2-years. However, with the monthly close at 3,363, this places the SPX near the mid-point of its intra-month range (3,209.45-3,588.11). Although an outside month is typically a major reversal pattern the monthly close during Sep 2020 suggests that it is neutral, neither bullish nor bearish development as it lacks the definition of a positive or negative outside month. Rather, this pattern suggests an uncertain market environment where the buyers and sellers are deadlocked. The monthly low for Sep 2020 (3,209.45) and the monthly high (3,588.11) provides key monthly support and resistance, respectively. The following month (Oct 2020) is important as the technical action during Oct 2020 may help to break the deadlock between the bulls and the bears. However, with less than a week before the end of the month, and inside month pattern (Oct 2020) may be developing. If this sustains then this warns of the continuation of an uncertain market environment as the bulls and the bears continue to battle. The high and low for the month at 3,323.69 (support) and 3,539.85 (resistance), respectively now become increasingly important technical levels. With no clear market direction, we will now defer to the technical action next month (Nov 2020) for guidance to the next major SPX trend.

SPX Weekly Chart

The weekly SPX chart continues to show a 2-year broadening pattern. This is historically a topping pattern. However, it can also turn into a bullish formation on a convincing breakout above the top of the broadening pattern (3,588-3,590). A weekly golden cross buy signal in late Jun-2020, rising 10-wk ma (3,407), and rising 30-wk ma (3,189.5) hint of an intermediate-term primary uptrend. However, a negative outside week (8/31/20) and a lower-high pattern (3,588.11 - 8/31/20 and 3,549.85 - 10/12/20) warn of consolidation. A key test of support at 3,393.5-3,407 (8/24/20 V-breakout and 10-wk ma) will help to decide the next near-term directional trend. A successful test can lead to a rally back to 3,550-3,588, and then to 3,590 (extension of the top of broadening top). However, violation of 3,393.5 warns of the next SPX correction to the pivotal intermediate-term support at 3,167-3,233 (Jul 2020 breakout, Sep 2020 low, 30-wk ma, and the extension of a secondary broadening trendline).


SPX Daily Chart


SPX (3,400.97) is currently testing important near-term support at 3,393.5-3,408 (Aug 2020 V-breakout and 200-day ma). The ability to find support here will trigger SPX rally back to retest key resistance at 3,550-3,5811 (Oct/Sep 2020 highs). However, a convincing violation of 3,393.5 warns of a retest of 3,209.5-3,233 (9/24/20 reaction low and the Jul 2020 breakout).


Source: Courtesy of StockCharts.com


Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

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