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S&P 500 Reversal Pattern Could Spell Doom For Stock Bulls

Published 12/17/2021, 02:55 PM
Updated 07/09/2023, 06:31 AM

S&P 500 Monthly Chart.

Rising stock market volatility has made for a very tough trading environment for investors.

And while stocks remain elevated, several key indexes and indicators are flashing caution.

Last week, I highlighted an important tech stocks ratio that is teetering. And today, we focus on the broader stock market via the S&P 500 Index.

On the monthly chart of the S&P 500, one can easily see the sharp move higher off the coronavirus crash low at (A). The move has been so steep that the up-trend has little room for error here. And the pattern of the move has taken the shape of a bearish rising wedge pattern. As you can see, the pattern is narrowing and price will squeeze one way or the other soon.

More importantly, and of concern, is that the S&P 500 created a bearish reversal pattern last month at (1). This occurred right at the 261.8 Fibonacci extension level. Not only does this create strong overhead resistance, but it also adds to concerns surrounding this rising wedge pattern.

If support would break at (2), following this reversal pattern, a dangerous message would be sent to investors. In short, stock market bulls don’t want to see this take place.

What would bring bulls a Merry Christmas and a happy new year?

A breakout above the 261% level at (1).

Latest comments

Be cautious when people are greed and overly bullish
Monthly macd soon breaks down. Check it out.
Thanks for your contribution
Don't Be Fooled: Tapering & Rate Hikes Can, And Will, Crash Markets
Doom? Please quantify doom. Will lives be lost? Will planets crash into each other? Will stocks go to zero?
hello guy I'm due about gold silver and soller
Gold seems to be the only asset rallying this Christmas along with silver. The inflation fairy is good for gold but toxic for everything else, and the next round of the virus is smashing the economy again...
Strong buy stocks christmas time is comeing yes
We will go more up!! It heppened mostly the opposite of what we expected
hello
investors are looking at the long term not the next 2 months - scalpers and day traders are watching daily - we've had covid for 2 years now and even though only about 65% of the US is vaccinated the market keeps on moving - there will be new variants and new noise - but peeps still have to eat and get on with their daily lives - the only ones at risk are those who are over leveraged or those who think the market only goes up!
That would be just about everybody...
Totally agree with your chart. Although going higher seems difficult at 261% fib. Right now the best way for the FED to achieve max employment and stable prices is to get the market to correct. Both reining in inflation and getting the great resignation crew back in the workforce
Meant to say let the market correct
the Fed would like to do that but their left wing bosses at the White House don't want that.
i saw another chart with Fib applied to 2000 lows and was forming a bullish pattern. Also one starting from '70 and Fib is showing the same. 2-1 for bulls...
"The only statistics you can trust are those you falsified yourself"  Churchill
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