Bear Market Over? This Level Decides
With 9 years of market experience, and four in the social media environment, I've learned the importance of maintaining neutrality, utilizing the most informative indicators to understand price action, and remaining open-minded to the chart's signals, rather than those from news or, even less so, social media “Herding Behavior”.
To control myself from emotional decisions, I use Support and Resistance levels to set targets, and to set validations of bullish or bearish reversals, as posted on Friday in the previous publication with educational content. For free access use the link:
On Saturday, April 26th, the Weekly Compass shared the following price targets for each security, and their accuracy by Friday, May 2nd was impressive: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $iShares Russell 2000 ETF(IWM)$ $SPDR Dow Jones Industrial Average ETF Trust(DIA)$ $Netflix(NFLX)$ $SPDR Gold Shares(GLD)$ $iShares Silver Trust(SLV)$
Let’s begin with the technical immersion
Back in December 16th, in the middle of the euphoria, I anticipated a significant 50% retracement of the bull market that began in October 2022, targeting $4800. The low reached thus far has been $4835 🎯🎯🎯. That accuracy is remarkable considering the provocative consideration when everything was in bullish mode.
The market is bouncing in a V shape, most of the move happened in April, and despite of having recovered 65% of the selloff, price action still has a key milestone to accomplish in order to rule out any thesis about a bear market rally.
Why such consideration? isn’t the bear behind us? isn’t the worst behind?: The chart below shows the theoretical bullish candle from April, but at the same time there are two elements to watch:
A bearish MACD crossover is confirmed, far from reset, and at a higher level than the one from 2022.
Previous bear markets have bottomed at the lower Bollinger band in confluence with 50 monthly average, even the COVID crash in 2020 and the Tariff war 1.0 in 2018. The latest bottom barely made it to the 50 monthly average.
So the context is mixed, we see a completion of a Fibonacci pattern that suggests the bottom IS IN, and also a bounce from the 50 monthly average zone that builds on that thesis; on the other hand the MACD crossover is at a higher zone than 2022, and that year printed the highest MACD crossover.
Currently the market is in bullish mode with signs of overbought conditions in the daily timeframe; the question is how sustainable is that? and if the market falls, where can an exit be set before it is too late?
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