The recent price decline wiped out the major intermediate term overbought and left the SPX
I have fair value at 2800, so most of the substantial overvaluation was also wiped out.
The SPX remains hyper-extended on a very long term basis.
The market has decisively broken the uptrend underway since late 2018 but remains positively
extended on a trend from the 2016 low.
The intermediate term MACD is turning down and speedy positive whipsaw reversals are rare.
I like an oversold 14 week stochastic as a long side entry point but we are not there yet (See
bottom panel of linked chart below).
The high volume of the past week signals a level of downside exhaustion.
Last week's price action is indistinguishable from the onset of a crash pattern, so more cautious
players may look for a bottoming process and not jump in long just because Friday did see
the SPX reverse partially and close up from its low for the day. I make this point because
intermediate term bullish sentiment has yet to be washed out yet.
SPX Weekly Chart
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!