Some investors liken the current moment to 1995 because of the potential for a “soft landing” after a bout of inflation and interest-rate hikes. Can technical analysts also find things in common?
Today’s S&P 500 charts consider some potential similarities between the start of the late-1990s bull market and the situation in January 2024.
The first pattern is the strongly overbought condition on Wilder’s Relative Strength Index. RSI jumped into the high 70s or low 80s on the initial rallies. In both cases it dipped to 54 before the index bounced.
Second, prices held a low from 2 weeks prior both times. That kind of tight consolidation may reflect a lack of selling pressure. (It can also keep attention focused on the next potential level slightly above 4800 from early 2022.)
Third, in 1995 and again in 2024, the 21-day exponential moving average (EMA) provided support.
At least one other pattern appears on the more recent chart that was absent a generation ago. This time, the index also managed to hold a 50 percent retracement of December’s advance. That, combined with the 21-day EMA and holding the December 20 low, may suggest that bulls remain in control over the short term.
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Important Information
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures or cryptocurrencies); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a futures commission merchant licensed with the Commodity Futures Trading Commission (“CFTC”). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association (“NFA”), and a number of exchanges. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services under federal and state money services business/money-transmitter and similar registrations and licenses.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a member of NFA. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit www.TradeStation.com...isclosureTSCompanies for further important information explaining what this means.
Today’s S&P 500 charts consider some potential similarities between the start of the late-1990s bull market and the situation in January 2024.
The first pattern is the strongly overbought condition on Wilder’s Relative Strength Index. RSI jumped into the high 70s or low 80s on the initial rallies. In both cases it dipped to 54 before the index bounced.
Second, prices held a low from 2 weeks prior both times. That kind of tight consolidation may reflect a lack of selling pressure. (It can also keep attention focused on the next potential level slightly above 4800 from early 2022.)
Third, in 1995 and again in 2024, the 21-day exponential moving average (EMA) provided support.
At least one other pattern appears on the more recent chart that was absent a generation ago. This time, the index also managed to hold a 50 percent retracement of December’s advance. That, combined with the 21-day EMA and holding the December 20 low, may suggest that bulls remain in control over the short term.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures or cryptocurrencies); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a futures commission merchant licensed with the Commodity Futures Trading Commission (“CFTC”). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association (“NFA”), and a number of exchanges. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services under federal and state money services business/money-transmitter and similar registrations and licenses.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a member of NFA. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit www.TradeStation.com...isclosureTSCompanies for further important information explaining what this means.
