To The Moon

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My last memo came out on the 6th of March. On that day, SPY closed at 672. Since then, SPY has made a low at 629 but still shy of the 609-615 area that was brought up in the memo.

Over the past month, has my view of the market changed? No. And I will share my outlook for the market, but this time with the S&P 500 Index itself, which has over 200 years of price history as compared to the SPY. Moreover, the SPY deviates from the actual index slightly, due to the expense ratio and other decay factors present in an ETF.

This memo is taken from analysis that I had done over the past few days. Currently, I am also embarking on a project to chart all the current S&P 500 constituents – that project is only about 27% complete as of the time of writing.

Again, I would like to emphasize that this is strictly not financial advice in any way but simply my own opinion on the general stock market. Please refer to the disclaimer located at the bottom of this memo.

Figure 1 - S&P 500 Index Monthly Chart

Since 2008, the S&P 500 index (SPX) has been in a steady uptrend within the green ascending channel shown above. The trend has been validated by at least 3 touches of both channel support and resistance. Currently, the SPX is still holding above the middle of the channel, suggesting that bulls are still in control on higher timeframes.

Last year, the SPX closed at 6,845. Keep this level in mind first.

This year, the SPX managed to form a new high at 7,002. However, it’s since headed back below last year’s closing price. To make things (a little) worse, the SPX formed a bearish crossover on the monthly stochastic, for the first time since January 2025. This lagging indicator preceded the downtrend into Liberation Day in April.

Figure 2 - S&P 500 Index Weekly Chart

On the weekly chart, the SPX has been trading in a tighter purple ascending channel. Despite the downtrend thus far, the SPX has found support at the 6,522 quarterly level, which is derived from the quarterly imbalance at 6,215-6,522 that was formed in October last year.

Figure 3 - S&P 500 Index Daily Chart

In the past few years, there’s been an interesting trend during market pullbacks in cases where the daily 200 moving average (200MA) is lost - the market tends to bounce back into the 200MA before continuing lower into the final landing point, which is typically a retest of prior resistance.

Figure 4 - S&P 500 Index Daily Chart (Close-up)

Currently, the SPX is still not back into the 200MA which is sitting at around 6,645.

Again, I need to reiterate that these are trends that are not empirical or absolute in nature. Good to know, but never definite.

However, there are also other possibilities that can spring out of this – namely a lower high at the 6,845 level, or even a higher high as far as the 2.618 Fibonacci extension at 7,424 if the 7,002 level turns into support. Remember, historically bulls have won about 80% of the time[1] over a longer time horizon, so it’s always good to know all the different scenarios that could happen.

Figure 5 - S&P 500 Index Yearly Chart

The yearly chart ties everything together really nicely.

The SPX made a high at 6,100 in 2024, while the current low in 2026 is at 6,317. As long as 6,845 continues to be a rejection level on the SPX, I’m watching the 6,100 level very closely.

Why? It’s simply because the SPX will form a yearly bullish imbalance if it closes anywhere above the 6,100 level. It simply becomes another strong level for bulls to defend next year and defines the trading range on the SPX for 2027. Coincidentally, this 6,100 level is also the half-yearly imbalance level.

If 6,100 is lost, then the SPX could potentially capitulate into lower timeframe imbalances on the monthly at 5,969 and the 5,695-5,861 zone. These imbalances will likely coincide with a retest of the purple channel support as seen in Figure 2. At the end of the day, as long as the 6,100 level is reclaimed, it still constitutes a successful retest of prior resistance/supply.

In terms of extreme scenarios, the worse-case scenario that could come out of this year’s candle is a repeat of the 2022 yearly candle, where the SPX retested the lows of 2021. The yearly bullish imbalance formed last year at 4,793-4,835 could then be an area of interest. However, this is probably unlikely given the confluence of channel supports (green, purple) present in both Figure 1 & Figure 2.

Ultimately, unless this 4,793-4,835 yearly imbalance is breached and turned into resistance, it’s unlikely for a crash to occur in the near term. Tops are a process that occurs over several months, sometimes years. While the formation of a bearish divergence on the RSI of the yearly chart in Figure 5 is not out of the question, market participants that acted upon the supposed bearish divergences on the monthly and quarterly charts in late-2024 were left blindsided by the ensuing rally.

Instead, I’m leaning towards the scenario where we capitulate and retest supply at or below 6,100 first, before a V-shaped rally back into this year’s high.

I hope this memo may help to shed some light on why the SPX is doing what it’s doing right now. My belief is that while market fundamentals are important, technical analysis and price action still have a place in the world. It shouldn’t be seen as a pseudoscientific field, but rather a complement to fundamental analysis. Price precedes news, such that news merely reinforces or even accelerates what the chart has been saying for a longer period of time. This also lends credence to Keynes’ quote that the “market can remain irrational longer than you can remain solvent”.

[1] https://www.linkedin.com/posts/vaneck-australia_bullmarkets-bearmarkets-bullandbearmarkets-activity-7374309077595643904-XchB/

@TigerWire @TigerStars @TigerEvents @CaptainTiger @MillionaireTiger

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