S&P 500: Are We There Yet On A Short-Term Basis?

Published 02/09/2018, 01:14 PM
Updated 07/09/2023, 06:31 AM

Weekly S&P 500

Is the bottom in play? Is it time to buy the S&P 500 after a 10% decline? An important short-term test seems to be in play.

The S&P 500 has been inside of rising channel (A) for the past 6 years. It hit the top of the channel a couple of weeks ago at (1), as momentum was the highest in decades.

The natural backing off from lofty momentum now has the S&P testing 2-year rising support at (2). The 10% decline over a couple of weeks has rarely happened in the past 100 years. Even though the decline has been big and surprised some, momentum has yet to reach levels where the S&P 500 bottomed in 2011 and 2016.

If support fails to hold at (2), 6-year rising support would come into play in the 2,375 zone. If this support happens to come into play, odds are decent that momentum would have had the chance to reach oversold levels.

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