29 May 2022 SPX Weekly - Breaking Out

Accuracy: 18/23 (78.26%)

SPX Below 4100 - Incorrect

Last Week

I mentioned there would be a potential reversal but I didn't expect the reversal would come so strong that it broke through 4100 resistance so easily. Although incorrect but market going back up is still something to be happy about.

We can see very clearly the breaking out on Friday's candle. Now we see a first sign of reversal on the shorter timeframe. In such cases, it leads me to pull out the timeframe to take a look.

Briefly drawing some regression trend line we see the longer term downtrend is still valid. This bigger waves will potentially look at the 4400 area for resistance.

Then we go back to daily candle to add in more perspective.

On the daily candle chart, I drew a fibonacci to find where this reversal might potentially find resistance. We get somewhere around 4220 - 4320 as the next area of resistance.

Next Week

For next week, let's have a hook at the 30 minutes chart as it will give us better details for nearer term.

First we see there's a coincide of resistance area at the 4320 which was previously tested 3 times and lines up with the fib 61.8 area. This to me is a pretty significant to watch out for.

Another key point is the final movements last week was pretty parabolic. The market usually don't go 1 way but instead moves in a wavy pattern. So I'd expect some small pullbacks even if it wants to move higher.

So my storyline would be some pullback towards the 4100 area which is a recent support turn resistance area that lines up with fib 38.2. Then start to find its way towards the fib50-61.8 area.

Economic Calendar

Next weeks economic event involves several bits of inflation related topic together with the Feds and FOMC member speaking. Since last week we have a strong run on Thursday and Friday, the market sensing seems more on the bull side now.

Next week's events will probably bring small bumps here and there but I believe the momentum should stay although might not be as strong.

Earnings

Last week I missed on touching earnings, one of the biggest note is NVDA having the initial reaction of gapping down after announcing their earnings with some bad forecast. But it immediately bounced back up with the market.

Next week we continue to have many mid cap earnings. From where it's not much about how well they fare in their earnings whether they meet expectation or not. I feel it's more of how these companies do their forecast into the next quarter.

Not only this will affect the company but it will also influence the other companies in the same industry and sector. One very obvious example we see recently is SNAP dragging down the whole communication sector (XLC) affecting FB GOOGL dramatically.

Prediction

Since the market broke out from the short downtrend channel. I'll play along with the reversal.

Also a fibonacci draw to see this run up pull back may find which support area. It seems the 3990 area have several convictions.

SPX above 3990