The dramatic plunge in the beginning of this month, changed the view to medium-term bearish on the SPX. About 10 days ago, the below chart was posted calling for a reversal to retest the lows:
Price hit a high of 1174, then turned down impulsively as can be seen in the chart below, once again below the 200-day moving average. That drop to 1065 has scarred investor psychology, fat finger or not.
A weak bounce to 1100
SPX is now oversold on the daily, and close to "neckline" support. Expecting a bit more downside into the mid-1060s, and then possibly a weak bounce. This formation does not look like a conventional H&S, in that the right shoulder happened in a jiffy! Initial upside resistance around 1100 (also the 200-day M.A). Let's observe how it moves.
A break below the neckline might yield 900-950 levels, especially if it happens after a bounce or a period of sideways movement, to relieve the short-term oversold condition. Most likely, the reverse of the past year is going to happen here: overbought & -ve divergences will be sold, but oversold & +ve divergences may be ignored!
All the best.
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