SPX: An Unstoppable Rally? Analysis of the D & W charts.
The SPX index is still trading within an area of resistance, which we identified together in our latest study, the link to which is available just below this post.
Although we have almost reached the next resistance at 4.607, the impression the index gives us is of a sideways correction. Since November 22, the SPX has been trading within our resistance zone (red area), without triggering any top signals, but without managing to continue the insane bullish rally either.
Despite the recent stabilization in the price, we don't see any significant top signals, or any kind of bearish reaction that could trigger a correction in the near future. But even if the index does correct, there are several support points that could hold the price, such as the 21 EMA, the gap open at 4.421, or even Fibonacci retracements as shown below.
It's worth noting how close the first retracement of 38.2% is to the gap. A correction up to one of these points would not pose any danger to the uptrend, so any pullback could become a buying opportunity. Remember, corrections are different from reversals. If there's no sign of a correction at the moment, it's even less clear that there's any chart structure indicating a reversal.
However, given the weekly chart, I understand the appeal that a correction would have:
The index has risen for five consecutive weeks, and the rally has been very intense. A pullback would be an acceptable and healthy move, and the 21 EMA would serve as a support point here too. It's worth noting that the average is at 4.402 at the moment, very close to the first Fibonacci retracement mentioned above and the last open gap.
For now, let's keep an eye on how the index reacts within its resistance zone over the next few days. Any sign of a top could trigger a medium-term correction, and in my view, if SPX closes below our resistance area again, we could finally see a correction. However, I agree that such movement is quite unlikely, at least right now. As I stated in our last analysis: "December is another good month for stocks, going up 1.50%, on average, and it ends up being a positive month 75% of the time."
I'll keep you updated, so remember to follow me for more analysis like this, and support the idea if you like it.
All the best,
Natthan.
Although we have almost reached the next resistance at 4.607, the impression the index gives us is of a sideways correction. Since November 22, the SPX has been trading within our resistance zone (red area), without triggering any top signals, but without managing to continue the insane bullish rally either.
Despite the recent stabilization in the price, we don't see any significant top signals, or any kind of bearish reaction that could trigger a correction in the near future. But even if the index does correct, there are several support points that could hold the price, such as the 21 EMA, the gap open at 4.421, or even Fibonacci retracements as shown below.
It's worth noting how close the first retracement of 38.2% is to the gap. A correction up to one of these points would not pose any danger to the uptrend, so any pullback could become a buying opportunity. Remember, corrections are different from reversals. If there's no sign of a correction at the moment, it's even less clear that there's any chart structure indicating a reversal.
However, given the weekly chart, I understand the appeal that a correction would have:
The index has risen for five consecutive weeks, and the rally has been very intense. A pullback would be an acceptable and healthy move, and the 21 EMA would serve as a support point here too. It's worth noting that the average is at 4.402 at the moment, very close to the first Fibonacci retracement mentioned above and the last open gap.
For now, let's keep an eye on how the index reacts within its resistance zone over the next few days. Any sign of a top could trigger a medium-term correction, and in my view, if SPX closes below our resistance area again, we could finally see a correction. However, I agree that such movement is quite unlikely, at least right now. As I stated in our last analysis: "December is another good month for stocks, going up 1.50%, on average, and it ends up being a positive month 75% of the time."
I'll keep you updated, so remember to follow me for more analysis like this, and support the idea if you like it.
All the best,
Natthan.
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