For the past couple weeks, we've been focused on SPX heading up to tag the black trendline on the long-term chart, and on Wednesday, it did. On Thursday, the market reacted hard, dropping 125 points, (something we haven't seen in a while).
It's mentioning that in doing this, SPX dropped all the way back to the previously-noted blue trend line. We'll see if that line acts as support:
It's pretty interesting how well the trend lines on the long-term chart above, some of which are roughly a decade old, line up with the trend lines on the chart below, which are only a few months old. So whichever chart you were watching, you knew that SPX had tagged resistance -- but if you were watching the long-term chart above, you also knew it was a significant resistance zone, and an upside target zone.
In black, I've sketched in one possible path the market could take. My first instinct is that the current decline, as sharp as it was, is probably still a fourth wave, and thus not a long-term top (though it could last a little while, depending on how complex any presumed fourth wave wants to get). I'm open to changing that view, but at this moment, my first inclination is that the rally isn't done yet.
In conclusion, SPX captured its next intermediate target zone and reacted pretty dramatically to it. Despite that dramatic reaction, there are as yet no key trend line breaks and no key overlaps, so (for now) we'll assume the long-term trend remains up -- at least unless/until bears break some key zones. Trade safe.
No comments:
Post a Comment