SPX: A Technical Approach to the Stock Market 1H (Apr. 20)

X FORCE GLOBAL ANALYSIS:


In this analysis, we take a purely technical approach to the S&P 500 Index.

Bullish Evidence

- We see a bullish divergence, with higher lows on the price, and lower lows on the indicator
- The Relative Strength Index (RSI) shows lower lows, as well the Moving Average Convergence Divergence (MACD)
- We are also creating higher lows and higher highs in an ascending trend line, having broken through a lot of strong resistances
- The RSI is looking for another breakout through the descending trend line resistance

Bearish Evidence

- However, we also spot a bearish divergence, in which the price forms higher highs, and the indicators show lower lows
- The RSI is trading within a downtrend, showing signs of weakening strength, forming lower highs and lower lows
- The RSI is at overbought levels
- The MACD also shows greater bearish histograms and a downtrend in the moving averages, showing a lack of momentum
- On the bigger picture, we are trading within a bearish ascending wedge

Market Sentiment:

We are still at the 'fear' zone in the fear greed index, but as the stock market showed a strong bounce, bullish sentiment begins to kick into the market again.


What We Believe

Based on purely the technicals demonstrated in the chart above, it seems as though the probabilities for a bearish case are higher. However, given that we take into consideration the amount of money the US government and Fed is looking to pour into the financial market, as well as the improving situation of the Corona Virus (Covid-19) in the states, the bullish scenario's probabilities aren't comparably too low either.

Trade Safe.