In the latest update on SPX, we set the short-term price target of 3 500 USD, and the medium-term price target of 3 400 USD as our fears about the reality sinking back into the market started to grow again. However, we would like to note that if the price manages to hold above the 5th October 2022 high, it will force us to abandon our price targets; under such a scenario, we would expect the market to test 3 850 USD and then 3 900 USD.
Despite that, we remain bearish and believe the current move up represents merely a bear market rally. Our conclusion is based on the fact that macroeconomic factors have not changed, even though technical ones are currently bullish. In our opinion, such a combination of technical and fundamental factors does not make up for the sustainable rally and trend reversal.
Therefore, we will closely monitor the price action throughout the current and next week. We will pay attention to the FOMC meeting, which is set to hike rates and further pressure the economy. We expect that to negatively affect the market and spark selling again; however, we would not be surprised to see some speculation about the looming pivot followed by initial buying. We will update our thoughts prior to the meeting.
Illustration 1.01
Illustration 1.01 displays the setup for the SPX with two alternative trades; if the price holds above the invalidation line, it will force us to abandon our price targets (temporarily).
Technical analysis - daily time frame
RSI, Stochastic, and MACD all point to the upside; however, MACD remains in the bearish zone. DM+ and DM- are nearing each other; if they perform the crossover, it will further bolster the bullish case in the short term. Overall, the daily time frame is bullish.
Illustration 1.02
Illustration 1.02 shows the daily chart's simple support and resistance levels for the SPX.
Technical analysis - weekly time frame
RSI, MACD, and Stochastic attempt to reverse to the upside. DM+ and DM- are bullish. Overall, the weekly time frame is neutral/slightly bullish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Despite that, we remain bearish and believe the current move up represents merely a bear market rally. Our conclusion is based on the fact that macroeconomic factors have not changed, even though technical ones are currently bullish. In our opinion, such a combination of technical and fundamental factors does not make up for the sustainable rally and trend reversal.
Therefore, we will closely monitor the price action throughout the current and next week. We will pay attention to the FOMC meeting, which is set to hike rates and further pressure the economy. We expect that to negatively affect the market and spark selling again; however, we would not be surprised to see some speculation about the looming pivot followed by initial buying. We will update our thoughts prior to the meeting.
Illustration 1.01
Technical analysis - daily time frame
RSI, Stochastic, and MACD all point to the upside; however, MACD remains in the bearish zone. DM+ and DM- are nearing each other; if they perform the crossover, it will further bolster the bullish case in the short term. Overall, the daily time frame is bullish.
Illustration 1.02
Technical analysis - weekly time frame
RSI, MACD, and Stochastic attempt to reverse to the upside. DM+ and DM- are bullish. Overall, the weekly time frame is neutral/slightly bullish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade closed: stop reached:
We abandon our price targets on the downside (temporarily).
Trade active:
We (re)set price targets to 3500 USD and 3400 USD.
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