Stock Market Technical Test (Technical Analysis) (SPX)

From a basic perspective, the debt ceiling will likely be a monetary and psychological burden on the inventory market till the political and financial self-harm ends, however for now spending can proceed because of the Treasury money steadiness (TCB) and the “extraordinary” Measures’ out there for the treasury.

On this article, we take a look at the inventory market from a strictly technical perspective.

Within the very long run (years and a long time)the SPX continues to experience the Raff’s mid-slope line up because it has many occasions within the final 30 years With out falling right into a “full entrance” bear market (blue oval beneath). The favored perception {that a} 20% decline defines a bear market is bigoted and never technically supported; A breakout beneath the Raff decrease regression line (purple ovals beneath) is required for technical affirmation of a bear market.

A better look exhibits that the SPX is above the 40- and 8-month shifting averages, and the technicians are recovering from the oversold ranges.

Over the previous 100 years, the inventory market has displayed a “step-like” sample of buying and selling vary intervals (steps, shaded in purple) lasting about 12 years, interspersed with spikes (highs) lasting about 20 years. Proper now, we’re 9 years into a type of main restoration intervals, which signifies that we’re simply Halfway With this main bull market (chart beneath):

As we method the final 9 years, we will see that there’s a fractal Recurring “step-like” sample, the place buying and selling vary steps final ~1 yr and staggered highs final 2-3 years. In line with this sample, the SPX index is rising away from the underside of the buying and selling vary and will get away to new highs in late 2023 (chart beneath).

I now change to a shorter date vary (days and weeks), The Weekly SPX broke above the Raff’s higher line and is now dealing with resistance on the 50-week shifting common, 4038. We anticipate some hesitation earlier than it breaks above this resistance (chart beneath).

Each day, the SPX has been pushed again via resistance on the 200-day shifting common, however there may be double help down at 3920 (38% Fibonacci retracement and the 50-day shifting common) after which once more at 3757 (23.6). % Fibonacci retracement). Different applied sciences are at a premium, however they’ll keep that means for fairly a while with out inflicting issues for SPX. Some impartial to weak motion is anticipated within the inventory market over the following week or two (chart beneath).

Worth: The technical ratio is bullish (in relation to the SPX), however technical indicators have reached prolonged ranges, which implies we anticipate various SPX weak spot days (chart beneath).

The push has crossed the highest space, because it did in Might 2020. This doesn’t imply that the SPX cannot go greater, however it does point out a “break” as we noticed in June of 2020 earlier than persevering with greater.

The IT quantity oscillator has crossed the RSI above 70 which signifies that the possibilities of a pullback within the SPX have elevated, though there may be room for it to rise additional (beneath chart).

The McClellan consolidation RSI is near the overbought stage at 70. Which means that the SPX is near a short-term pullback (chart beneath).

Briefly: the long-term major pattern continues to be bullish. The SPX is bouncing off the underside of the fractal buying and selling vary and is prone to get away to new highs earlier than the top of the yr. Over the following two weeks, the market is anticipated to weaken (however not collapse) and this could present a possibility so as to add lengthy positions in large-scale ETFs resembling SPY, QQQ, and IWM.