S&P500 - possible pull back coming in next 2 weeks
SPX and the US markets have become extremely extended in the last few days/weeks and a pullback is now a little overdue...
Of course we could remain in overbought conditions for a while longer but I believe we see a pullback in the next two weeks.
Here's why:
Daily chart (above):
Daily TF has become overbought on various indicators - RSI is 76 (blue on RSI colour overlay - however we may need to print some bearish divergence first with another divergent high in next few days), Stochastics are overbought, and MFI showing a sell signal.
We have now hit daily resistance TL from April 2021 highs and daily price action from the October bottom is in very tight wedge.
Targets are purple horizontal areas.
Distance above daily Moving Averages and number of days without a pullback to at least 20dma at a minimum or 50dma is high and mean reversion is not unreasonable:
4hr zoomed in view:
The reason I say a pullback is coming in the next 2 weeks is due to the monthly OPEX (options expiry) - the next of which is 19th November - as shown in by the vertical dashed white lines in the below chart:
Vix (daily) appears to have found a bottom:
SPX and VIX / VVIX are showing divergence off recent bottom in October:
Percentage of stocks above 20-Day Average (MMTW/S5TW/DITW/NDTW) - also in overbought range:
PCC (Put to Call ratio) hit 0.5 on Friday which is fairly low:
Of course we could remain in overbought conditions for a while longer but I believe we see a pullback in the next two weeks.
Here's why:
Daily chart (above):
Daily TF has become overbought on various indicators - RSI is 76 (blue on RSI colour overlay - however we may need to print some bearish divergence first with another divergent high in next few days), Stochastics are overbought, and MFI showing a sell signal.
We have now hit daily resistance TL from April 2021 highs and daily price action from the October bottom is in very tight wedge.
Targets are purple horizontal areas.
Distance above daily Moving Averages and number of days without a pullback to at least 20dma at a minimum or 50dma is high and mean reversion is not unreasonable:
4hr zoomed in view:
The reason I say a pullback is coming in the next 2 weeks is due to the monthly OPEX (options expiry) - the next of which is 19th November - as shown in by the vertical dashed white lines in the below chart:
Vix (daily) appears to have found a bottom:
SPX and VIX / VVIX are showing divergence off recent bottom in October:
Percentage of stocks above 20-Day Average (MMTW/S5TW/DITW/NDTW) - also in overbought range:
PCC (Put to Call ratio) hit 0.5 on Friday which is fairly low:
Note
It's happening GIF Note
New COVID-19 strain found in South Africa - panic selling ensues: Note
Now retraced to previous / september ATH and 50dma tagged With intraday dMA overlay
Whilst we may see further continuation down - 100dma is a given at this point but not sure if this time will be different and that will break too just yet..
However in my opinion a bounce is due now...
Lot's of oversold metrics around at today's close level - MMTW / S5TW / DITW all in single digits
Note
Low's are in - VIX got absolutely crushed today and down almost 20%
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.