Things have gotten very over-sold for the major indexes and the stock market as a whole but there are things on the macro charts showing that there are incoming winds of potential change.
4th quarter is always a major time for retail and earnings so these are possible factors as well but if we keep simply to the charts on the weekly, we will see that price action is stalling in terms of its ability to continue to the downside.
When this occurs a simple way to check for possible seller exhaustion is by peeking at the relative strength index and comparing it to the price action on the chart. And in this case, we see bears putting in a lower low in price, yet on the RSI the reaction has been a higher low on the indicator.
To sum this up, this is a signal, that at least in the short to medium term, the strength has shifted over to the bulls.
The area to watch is the 3556 level. As long as this level holds look for a rally to 4000 in the coming weeks and months.
This will be very difficult level to sustain price action above if a rally was to take us to this level any time soon so use this as a possible trade opportunity until more positive macro factors start to come into the picture in the meantime.
4th quarter is always a major time for retail and earnings so these are possible factors as well but if we keep simply to the charts on the weekly, we will see that price action is stalling in terms of its ability to continue to the downside.
When this occurs a simple way to check for possible seller exhaustion is by peeking at the relative strength index and comparing it to the price action on the chart. And in this case, we see bears putting in a lower low in price, yet on the RSI the reaction has been a higher low on the indicator.
To sum this up, this is a signal, that at least in the short to medium term, the strength has shifted over to the bulls.
The area to watch is the 3556 level. As long as this level holds look for a rally to 4000 in the coming weeks and months.
This will be very difficult level to sustain price action above if a rally was to take us to this level any time soon so use this as a possible trade opportunity until more positive macro factors start to come into the picture in the meantime.
