SPX | The RSI Warning
Updated
Relative Strength Index, is one of the most famous indicators. If analyzed correctly it can show us warnings very early on.
Look at this period between 2010-2014 for USOIL
Price is supported by a very wide ribbon, while RSI is under significant resistance. When we are talking about such wide timeframes, RSI action is VERY important. One could say that RSI analysis is more important than price analysis.
On to the protagonist, SPX...
While price is under WIDE support, RSI shows the oncoming weakness.
After the recession, this is the confirmation that we reached a bottom.
Onto todays outlook:
Tread lightly, for this is hallowed ground.
-Father Grigori
Look at this period between 2010-2014 for USOIL
Price is supported by a very wide ribbon, while RSI is under significant resistance. When we are talking about such wide timeframes, RSI action is VERY important. One could say that RSI analysis is more important than price analysis.
On to the protagonist, SPX...
While price is under WIDE support, RSI shows the oncoming weakness.
After the recession, this is the confirmation that we reached a bottom.
Onto todays outlook:
Tread lightly, for this is hallowed ground.
-Father Grigori
Note
Look at some more charts:This is the DXY*SPX/PPIACO chart
Sometimes, there is no support when we believe that there is.
The two red arrows show two points where the price ribbon shows support, while RSI is resisted under resistance. This is contradictory and leads to further drop.
Note
Honestly, it looks like we are in the 60sWelcome to stagflation!
Note
Look at Initial ClaimsStochastics are as glued together as it gets. RSI is over support, I scaled it up to make it more visible.
Note
Even if price doesn't show it, SPX is showing the first signs of weakness (1M chart)The picture is worse for NDQ
While short-term weakness is now apparent, this may not be the end.
In longer timeframes, we observe substantial RSI support, even though stochastics have almost reached the top. In 1997 stochastics reached the top of their oscillation, but increase in equities*mod-yields continued. We haven't seen substantial RSI divergence yet.
Do note that this chart is increasing even if equities remain stable with yields increasing. We have indications that at least short-term, yields are overbought and equities oversold. So a temporary shift in balance can be expected.
One long-term trendline is already violated. It looks like we might be retesting it and probably failing it (significant price resistance above, and ribbon resistance). Testing the next (and "final") trendline may follow, failing it there is no bottom.
Note
Beware of the traps!
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