The correction is probably almost done. Nonetheless, a final selloff is likely.
The S&P 500 probably corrected within an irregular flat. It ended the bearish trend for the moment and found support at the 4245 S/R. Subsequently, the index traded within a range, probably forming a fourth wave.
Meanwhile, sentiment is extremely bearish according to the majority of gauges. Most investors are more bearish than during the 2020 corona crash. Similar sentiment conditions have always resulted in a sustainable rally during the bull cycle since 2009. However, it is reasonable to question whether US indices are still in a bull trend because of the recent decline. Double-digit countertrend rallies are also a common characteristic during bear markets. Typically, they begin around similar conditions as today: Very pessimistic sentiment and oversold technicals. Therefore, it makes sense to look out for more signs of bottom building.
Momentum was sharp during the last selloff. A non-confirming spike to the downside on less momentum, less breadth, and less volume signals that a reversal is imminent. The black scenario shows the optimal path from a technical perspective. It leads to the 4120-4165 cluster.
The S&P 500 probably corrected within an irregular flat. It ended the bearish trend for the moment and found support at the 4245 S/R. Subsequently, the index traded within a range, probably forming a fourth wave.
Meanwhile, sentiment is extremely bearish according to the majority of gauges. Most investors are more bearish than during the 2020 corona crash. Similar sentiment conditions have always resulted in a sustainable rally during the bull cycle since 2009. However, it is reasonable to question whether US indices are still in a bull trend because of the recent decline. Double-digit countertrend rallies are also a common characteristic during bear markets. Typically, they begin around similar conditions as today: Very pessimistic sentiment and oversold technicals. Therefore, it makes sense to look out for more signs of bottom building.
Momentum was sharp during the last selloff. A non-confirming spike to the downside on less momentum, less breadth, and less volume signals that a reversal is imminent. The black scenario shows the optimal path from a technical perspective. It leads to the 4120-4165 cluster.