The Candle That Started The Bull Market
Today the SPDR S&P 500 ETF made a rare marubozu candle - that is a candle with no bottom and no top. It is not said to have any predictive power, but to only exist when buyers (or sellers) have high confidence. The current bull market has historical parallels that suggest it may be here to stay. In 1995, a similar candle was printed the day before the legendary 1990's bull ran began.
Could it really be that simple? Maybe not. But the historical price action from 30 years ago has a LOT more parallels than that. Take these examples from the ETF's first all-time-high in 1994 & the recent all-time-high that has just been surpassed...
The marubozu candles both printed following a descending wedge/megaphone formation, then a sharp uptrend with an unfilled gap beneath the final price action.
But are there any bearish historical parallels? Yes, actually. Sort of.
Price-action in SPY futures is also similar to the Nikkei's 1998 futures trading. Note the same kind of lows in October 1998/2022 and March 1999/2023, with similar volume. A technical pullback happened at approximately the same time as now. However, a just as in 1994, a run to new all-time-highs followed on the futures chart - but not a new bull market in Japan. In this scenario, SPY has a target of approximately 535 before reversal.
SPY price action seems more bullish now than either of the scenarios I have highlighted, though!
Every day at this point we don't see a sizable rejection suggests this is the start of some new wave in the ETF's history.
Trade safe!
Could it really be that simple? Maybe not. But the historical price action from 30 years ago has a LOT more parallels than that. Take these examples from the ETF's first all-time-high in 1994 & the recent all-time-high that has just been surpassed...
The marubozu candles both printed following a descending wedge/megaphone formation, then a sharp uptrend with an unfilled gap beneath the final price action.
But are there any bearish historical parallels? Yes, actually. Sort of.
Price-action in SPY futures is also similar to the Nikkei's 1998 futures trading. Note the same kind of lows in October 1998/2022 and March 1999/2023, with similar volume. A technical pullback happened at approximately the same time as now. However, a just as in 1994, a run to new all-time-highs followed on the futures chart - but not a new bull market in Japan. In this scenario, SPY has a target of approximately 535 before reversal.
SPY price action seems more bullish now than either of the scenarios I have highlighted, though!
Every day at this point we don't see a sizable rejection suggests this is the start of some new wave in the ETF's history.
Trade safe!
Comment:
The marubozu candle turned out to be a reversal sign instead of a confidence sign. Pretty significant amount of profit-taking happened yesterday, and the ETF closed below the key 470 level. That would imply more selling, but this morning's pre-market seems to disagree.
The marubozu candle turned out to be a reversal sign instead of a confidence sign. Pretty significant amount of profit-taking happened yesterday, and the ETF closed below the key 470 level. That would imply more selling, but this morning's pre-market seems to disagree.
Comment:
An update to the Point and Figure chart from earlier
If we close under 510 next week, we'll have a 1 "box" reversal. According to this old fashioned chart, we would need to close under 465 (that's 3 boxes) to confirm a true end to our bull run so far - just under the price of the first trading day of the year.
If we close under 510 next week, we'll have a 1 "box" reversal. According to this old fashioned chart, we would need to close under 465 (that's 3 boxes) to confirm a true end to our bull run so far - just under the price of the first trading day of the year.
The tiny wick revealed...