S&P is strong; however, some immediate uncertainty looms
Updated
Last week was marked by a very slow start and a chaotic finish. On Monday and Tuesday, prices bracketed in a very narrow range with neither side willing to take action. On Wednesday, the bulls gathered some momentum for a rally only to be countered by the bears the next day. While the bears’ attack appeared fearsome, it lacked real conviction (as I pointed out in my report), and it eventually faded. On Friday, the bulls took the initiative, erasing all the bears’ achievements.
From a technical perspective, we have the following disposition:
1. Price is in an uptrend on all major timeframes. Last week closed quite strong.
2. All major S&P sectors are supporting the upward movement (see Market Inner Strength Index)
3. RSI is highly overbought on the daily timeframe and slightly overbought on the weekly timeframe. Although this doesn’t mean much in strong uptrends, we should still pay attention to it.
4. On the hourly chart, there is some unclear bracketing with an extending range. We have both a poor high and a poor low.
The bulls clearly have the upper hand on all major timeframes, making the most likely scenario a continuation of the uptrend. Fundamentals are also on the buyers’ side: inflation is decreasing, and the first bank reports were quite positive.
However, it is also possible that we’ll see more bracketing in the short term due to political uncertainty, which deprives the market of the conviction needed for prolonged movements. We can see signs of traders’ hesitation on the hourly chart: breakouts without follow-through and reluctance to carry positions over the weekend. Coupled with price overextension (remember the RSI), there are enough arguments to support the need for short-term consolidation and the collection of additional information before moving higher (if nothing changes fundamentally).
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
From a technical perspective, we have the following disposition:
1. Price is in an uptrend on all major timeframes. Last week closed quite strong.
2. All major S&P sectors are supporting the upward movement (see Market Inner Strength Index)
3. RSI is highly overbought on the daily timeframe and slightly overbought on the weekly timeframe. Although this doesn’t mean much in strong uptrends, we should still pay attention to it.
4. On the hourly chart, there is some unclear bracketing with an extending range. We have both a poor high and a poor low.
The bulls clearly have the upper hand on all major timeframes, making the most likely scenario a continuation of the uptrend. Fundamentals are also on the buyers’ side: inflation is decreasing, and the first bank reports were quite positive.
However, it is also possible that we’ll see more bracketing in the short term due to political uncertainty, which deprives the market of the conviction needed for prolonged movements. We can see signs of traders’ hesitation on the hourly chart: breakouts without follow-through and reluctance to carry positions over the weekend. Coupled with price overextension (remember the RSI), there are enough arguments to support the need for short-term consolidation and the collection of additional information before moving higher (if nothing changes fundamentally).
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
Note
Gap down open yesterday but not much follow through. still within previous day range. Tech sector is weak but Financials and Healthcare are growing. Key word - rotation
Note
A strong sell-off today, with all major sectors declining, allowed bears to take down the previous week's low. This could potentially start weekly consolidation, but it's not yet over for the bulls. The hourly RSI has approached oversold conditions, providing buyers with a technical springboard. Let's see if they can use it.
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