SPX - Pullback or further continuation?
While covid cases rise amid a new strain and the stimulus bill stalls as the government looms on a shutdown, the charts do not show any real type of bearishness at all. Actually, quite the contrary.
Looking at this last runup, we have a big pop the week prior to the elections and we were able to break through the downtrend, retest, and resume off of it. The SPX then went on to break the 12 year trendline, retest, and resume off of it. Since then, momentum has started to stall.
Everyone is expecting a huge selloff or minor correction. The Put/Call ratio is sitting around .8, which is above .7 so that is technically not a bearish signal at all. VIX continues to see downward pressure and waning momentum with the potential to fill the gap back down to 20, signaling a stabilizing market. The dollar continues to get obliterated but it is gaining some momentum. Maybe fears of the risks of Brexit since nobody really knows what will happen? Maybe covid cases rising with potential lockdowns coming?
I am expecting a minor correction back down to around 3480 level BUT I would not be surprised if that doesn't happen at all. If the bill is signed, more vaccinations are approved, and we don't have any states pose potential new shutdowns (which is the biggest risk right now), then I don't see how anyone could be bearish. The amount of liquidity being injected will cause inflation which is very bullish for equities, precious metals, and cryptos over the next several years. Until there are significant levels broken, this bull market continues.
As always, do your own research and formulate your own theories. I am not a financial advisor and this is not financial advice. Good Luck!
Looking at this last runup, we have a big pop the week prior to the elections and we were able to break through the downtrend, retest, and resume off of it. The SPX then went on to break the 12 year trendline, retest, and resume off of it. Since then, momentum has started to stall.
Everyone is expecting a huge selloff or minor correction. The Put/Call ratio is sitting around .8, which is above .7 so that is technically not a bearish signal at all. VIX continues to see downward pressure and waning momentum with the potential to fill the gap back down to 20, signaling a stabilizing market. The dollar continues to get obliterated but it is gaining some momentum. Maybe fears of the risks of Brexit since nobody really knows what will happen? Maybe covid cases rising with potential lockdowns coming?
I am expecting a minor correction back down to around 3480 level BUT I would not be surprised if that doesn't happen at all. If the bill is signed, more vaccinations are approved, and we don't have any states pose potential new shutdowns (which is the biggest risk right now), then I don't see how anyone could be bearish. The amount of liquidity being injected will cause inflation which is very bullish for equities, precious metals, and cryptos over the next several years. Until there are significant levels broken, this bull market continues.
As always, do your own research and formulate your own theories. I am not a financial advisor and this is not financial advice. Good Luck!
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