Time to update our view on the SP500, which for the last time, was mentioned here on the 5th of November, so not so long ago. In our previous piece, we were bearish but as you probably know, the price is climbing higher. Did anything change here? Well, our view in the longer term is still bearish but the local upswing is really impressive and it seems that in the short-term, buyers will be controlling the situation. OK, let’s see how we concluded the previous analysis:
“Situation is still promoting a further slide. Similar setup happened here at the beginning of the year. As you can see, the slide was stopped for a while but after some time, the price made new lower lows. This can happen here too. In my opinion, the next few weeks should be negative. „
This week’s trading allowed the SP500 to create the inverse head and shoulders pattern. On Tuesday, the price broke the neckline of this formation (black) and came back above the up trendline (green). Wednesday’s reaction on that was kind of euphoric and the price climbed significantly higher. With all this, the current sentiment has to be positive. Before going full buy mode here, remember that at the beginning of the year, it all looked the same and still, price managed to make new lower lows.