23 Jan 2022 SPX Weekly - Bear

Accuracy: 5/7 (71.4%)

Last Week

My prediction that SPX stay above 4600 got crushed totally. Not only did SPX not support around 4600, it crashes down all the way to 4400.

Even with just a 4 day week, we had 4 big red candles on daily SPX chart. Because this 4 big red candles has fallen through major trend line support on a higher time frame. This time instead of looking into the 15 minute chart, we should zoom out to look at a bigger picture.

We see that SPX has currently retraced all the way to 200 moving average. The last time SPX ever touches 200 moving average is during the covid crash in 2020.

On the weekly chart, we see SPX very near to the 50 moving average. We also see that SPX has been rising in a much faster pace than before in the past 1-2 years mainly due to quantitative easing.

Upcoming Week

SPX currently ended Friday around 4400 area. We would probably see SPX struggling around daily 200 moving average and weekly 50 moving average.

After some big moves, SPX should start to find support probably around 4277-4350. Which is the weekly 50 moving average and the previous swing low back in October 2021.

On the upside, the previous support turn resistance area around 4545 may form a good resistance area which would coincide with the 100 moving average.

After all these are still technical perspective, the market movement recently is still heavily due to economic events.

Economic Calendar

The biggest highlight will be FOMC next week, which is happening on Wednesday 2 pm ET. On the screenshot above it's my timezone of GMT+8, which is 3 am my time. The FOMC statement more or less decides where the markets will go.

Earnings

This time round, it's even more happening with earning season starting.

Last week we had some early earnings from a few banks and the most notable Netflix (NFLX) that caused some market movement. I'd say partially leading to the 4 bear days we have. Subsequently, we are going to have all the mega cap and big cap earnings starting the roll. All these will also cause more volatility to the market.

Prediction

With all the above analysis, I actually lean more towards the bearish scenario. It's also hard to make prediction with such high volatility and events. A lot of things can happen as there are too many variation involved. But I will still try to put on a prediction.

SPX to stay below 4545 by end of next week.