Market Pullback: Bounce or Break? Analyzing Key Support & Indicators
Price retraced as overbought technicals and price action signaled.
$S&P 500(.SPX)$ : Found support at the 10 day moving average. Shorter timeframes show a bullish candle at the close, offering some hope. See 4H circled. However, the daily oscillator suggests its downward move is just starting, aligning with the recent bearish crossover.
$NASDAQ(.IXIC)$ : Found support at the 20DMA, will this hold again? Oscillators suggest otherwise, given the bearish crossover. Positive factor is the low volume suggesting a lack of conviction in the current price action.
$Tesla Motors(TSLA)$ : Bearish oscillator but price action set a potential morning star at the lower Bollinger band, a technical bounce wouldn't be surprising.
$Cboe Volatility Index(VIX)$ : Looks bad for indexes, there is a bullish crossover and its level jumped with conviction. Possible tactical bounce tomorrow but there is room for further decline completing a healthy reset of technicals.
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Healthy Pullback Incoming? Decoding the Fear and Greed Index:
Historically, when the Fear and Greed Index reaches extreme greed (red arrows) and the price is overbought, a decline follows, as indicated by the black ovals.
Last time was in January: While many anticipated $4500 or even $4100, $4700, which I identified as strong support, held. The price closed just 18 points below my expected level. This pattern suggests a healthy pullback is likely, as the SP500 currently experiences higher highs during a sustained extreme greed level (similar to July 2023, highlighted by yellow circles).
Crash coming? No, and as I have mentioned since January, people waiting in the $4500 stop missed the bus long ago, also the ones waiting at $4600. $4900 to $4800 are reasonable levels to expect, unless $5110 is consolidated next week.
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