As noted, evidence for a low in the S&P is strong. Friday’s low is at the line that crosses the January and February lows and the LONG TERM parallel (see below chart). Also, VWAP from the 2020 low in SPY held last week (see 2 charts down). 4105 is the initial level to pay attention to but 4270s in the index and 426.00s in SPY line up more significant levels…eventually.
Violent reversal indeed. I’m of the mind that this rally has legs given the massive 1.0500 figure and extraordinarily bearish sentiment. Upside focus is 1.0840 or so, which is the underside of the trendline from the 2017 low and median line of the bearish fork. Support is 1.0570/90 (see below).
SPX held up after yesterday’s reversal. There are 2 big levels to note for possible resistance…4250 and 4360/90. The latter level seems like a stretch in the near term but FOMC is tomorrow and sentiment is wildly bearish, which provides plenty of fuel for a violent squeeze. Bottom line, I’m thinking higher following yesterday’s reversal, especially after futures held the large volume level during Tuesday’s trade (see below).
SPX took out the 2/24 low (invasion low) before reversing higher to finish with a high volume reversal (see below). The low was right at the median line of the bearish fork too. Sentiment across virtually all major asset classes is insanely extreme (USD, bonds, and equities). The median line tag and reversal from under the February low is a perfect setup for a squeeze higher. If however price breaks below the median line then the market would be in crash territory.
Heightened bond and FX volatility (notably JPY) has spilled over to equities. SPX is pressing yearly lows and there is no sign of a hold at this point. Price action since September is a distorted head and shoulders top with a negative sloping neckline…very bearish. The measured objective from the pattern is 3724. Barring a miraculous save, 3724-3856 looks like the next magnet. Recall that we started sounding the alarm on a top last September when price was pressing into the long term upper channel line (see below).
USDSEK held up for 2 days before crashing though the median line today. The drop under the median line is a key bearish development for the USD generally. The underside of the line is now resistance…as it was in June, July, August, November, January, and February. That’s currently about 9.56. The next downside test is 9.15/18 (lower parallel and former resistance).
AUDUSD broke above the median line today so longs are in play. The top side of the median line is proposed support now (formerly resistance) near .7265. This is also the year and month opening prices. One benefit to trading with median lines are tight stops. That’s especially useful in this instance given the proximity of the January high and 200 day average as possible resistance. Upside focus is .7370 followed by .7420s.
USDOLLAR held the trendline that originates at the September low today. A break of this line is what I’m waiting for to signal ‘all clear’ on the downside for the USD.
SPX has retraced 61.8% of the decline from the high. This is also ‘original’ trendline resistance. This is a perfect spot for at least an interim high. I’m looking lower towards 4494 or so (2022 VWAP) and possibly 4404.
Pay attention to 1.3375-1.3410 in GBPUSD for support. The zone is defined by the 12/16 high, 61.8% retrace of the rally from December, and September low. The bottom of the zone also intersects with the lower parallel of the short term bearish fork (see 4 hour chart below).