Update 10/4/2022
This week's opening was a strong bounce that allowed price action to close last week’s gap. This is a strong bullish signal. All the comprising sectors show the same strong bounce. This bounce implies that what we saw last week was a false breakdown. The next resistance level I have marked on the chart is at the 3945 level.
The week ending 9/23/2022 saw a downward gap between Thursday’s and Friday’s candle. This downward gap, plus the price action approaching June’s low, established boundaries to determine bearish or bullish signals. A close filling the gap would signal a bullish trend for the year's final quarter, while a close below the June low would signal a bearish trend. On Wednesday, we saw a bounce that tried to close the gap and failed. On Friday, we saw a close below the June low. A clear bearish signal. I expect the SP500 will continue to grind lower into the end of the year.
Week Ahead
I expect the bearish trend to continue this week until we hit the 3550 level. We will likely see some support as a bounce or flag/pennant at this level. My trade plan for the week is to examine the weakest sectors and look for shorting opportunities. Posts detailing the sectors I am taking short positions will drop early this week. I will not be looking to take long positions until a clear bottom is established.
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