S&P 500 Falls to Support

Preface

This will be a shorter post than prior ones and looks at the S&P 500 and its abrupt decline to support.

S&P 500 (SPY)

The SPY is down 15% from its August highs and has hit a support trend line that leaves little room for more downside unless its rather large.

Here is a chart with the pivot point chart also super imposed on it on the lower right hand side, followed by a quick discussion:

The trend resistance, which is the green line and is automatically drawn by Pattern Finder, starts at the Dec 2021 highs, connects with the next (lower) high in March 2022 and (unfortunately) magically also spotted the high in August and perfectly coincided with the 200-day SMA.

Once that resistance line was hit and the 200-day was broken, off went the index.

But it’s the other side that matters right now - the trend support.

The red trend support line is also automatically drawn by Pattern Finder.

The bottom line (no pun intended) is that the index has seen serious selling and is at support.

If that line is broken the next logical areas are the 52-week low ($362) and then a re-drawn support from ascending base in 2020 which would give us another 5% down to the $350 area.

Below that... Fibonacci comes into play. Here is the pivot point chart from Pattern Finder.

The short swing trader may consider at least some profit taking now even if letting some winners run into the weekend.

The rather risky long swing trader may have their spot to start a swing, with either the 52 week low or the $350 spot as a stop loss and the profit zone could be back to the 10-day SMA in the $382 range.

But in fairness, the index is in technical failure and a confirmation of a reversal (whenever that comes) might be more prudent.

There are a lot of ways to play the index.

Ultimately, CML Pattern Finder is a charting and fundamentals web-based software using CANSLIM patterns but then many more algorithmically powered signals. It’s driven by a community of traders that share ideas, screens, and charts daily to try to profit from the market.

What’s Next

We will continue to share charts and screens with short discussions over the next few weeks before the CML Pattern Finder product becomes available.

The product will have everything IBD MarketSmith® has, a lot more, like algorithmically drawn support and resistance trend lines, built with better, faster, more flexible, and more responsive technology.

It allows for additional technical signals beyond just those offered by the CANSLIM methodology, far richer fundamental screening data, but…

… it will cost 70% less. Yes, 70% less.

Stay tuned to this channel.

Thanks for reading CML Pattern Finder.