S&P500 One last round of pain before the Bull Cycle?

The S&P500 index (SPX) closed the worst week since October on a not so encouraging note as the failed to break and got rejected on the 1W MA50 (blue trend-line). A simple comparison with the major corrections of 2002/03, 1982/83 and 1962/63 shows that as long as the index remains below the 1W MA50, the Bear Cycle is in effect.

A common characteristic among all 4 sequences is that the 1W RSI is on Higher Lows while the index (with the exception of 1962/63) is on Lower Lows, i.e. a Bullish Divergence.

The exception of 1962/63 is the most optimistic one as after a mont of sideways price action on the 1W MA50 (green circle), the index eventually rose aggressively and recovered the High.

The 1982/83 period is the most pessimistic as while the RSI made one last (3rd) Higher Low, the S&P500 made a Lower Low (red circle) before rebounding above the 1W MA50 and into the new Bull Cycle.

The 2002/03 sequence is a neutral one as the index did get rejected on the 1W MA50 one last time but made a Higher Low (blue circle) and broke above the 1W MA50 1.5 month later.

Which of the three scenarios do you think will prevail this time?


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