SPX: Where do we go from here ?
The market has had a fantastic bull run since the financial crisis after forming a bottom in March 2009. The rally has taken us over 100% since and then some and there really isn't anything one could ask for given the euphoric push forward this early 2020 that is reminiscent of the run in early 2018 before the volatility spike and correction. However, this Corona virus instigated correction has been far steeper than anything before and is somewhat comparable to the 1987 crash in many ways from a technical analysis standpoint.
What I see in this monthly chart is that the downside thesis is not yet done. The volume profile at the critical Fib areas suggest that the extension will bottom near 2070 area and perhaps not before, even if we may chop around range bound until that capitulation occurs. The Fib time series also shows with some decent accuracy that the peaks and troughs have followed the pattern well so far and that the next bull rally should retest the recent highs before 2022. That seems far away at the moment, and there is umpteen fundamental triggers that may invalidate the thesis before that.
While there is nothing absolutely new in what I've described here, I think I will become a full blown dip buyer near the 2070 area, while I continue to nibble on some value stocks along the way and scalp short term downside selloffs. Safe trading out there and respect the volatility until some resolution to COVID comes through.
What I see in this monthly chart is that the downside thesis is not yet done. The volume profile at the critical Fib areas suggest that the extension will bottom near 2070 area and perhaps not before, even if we may chop around range bound until that capitulation occurs. The Fib time series also shows with some decent accuracy that the peaks and troughs have followed the pattern well so far and that the next bull rally should retest the recent highs before 2022. That seems far away at the moment, and there is umpteen fundamental triggers that may invalidate the thesis before that.
While there is nothing absolutely new in what I've described here, I think I will become a full blown dip buyer near the 2070 area, while I continue to nibble on some value stocks along the way and scalp short term downside selloffs. Safe trading out there and respect the volatility until some resolution to COVID comes through.
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