Time for a slight rebound?

Updated

The S&P 500 Index bounced off the support near $4,103 on Friday. Then, today, the futures market opened up about 0.5%, bringing the index closer to $4,140 (by the way, on Friday, the futures market also opened up by approximately the same amount). Now, we will observe whether the index will overtake its Friday high; if yes, it will bolster the odds of a rebound in the short term (potentially up to somewhere between $4,200 and $4,300). For more clues about the rebound, we will also watch the Chinese stock market as we expect it to go through the relief ahead of the U.S. stocks (as a matter of fact, SSE has already been trending up in the last week, with HSI somewhat lagging). However, if SPX fails to take out its Friday high, accompanied by a spike in the VIX, it will alert us to more downside.

The list of some of the corporations reporting their earnings this week:
- Advanced Micro Devices
- Airbnb
- Apple
- Caterpillar
- CVS Health Corp.
- HSBC Holdings
- McDonalds
- Pfizer
- Pinterest
- Shopify
- Stellantis N.V.

Technical analysis gauge
Daily time frame = Bearish
Weekly time frame = Bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Note

At the start of this week, we discussed the potential for a slight rebound in the price of SPX. Subsequently, the markets turned to the upside, and SPX broke above $4,200. In the meantime, a new attractive setup for a short trade emerged (shown in Illustration 1.01). We will update our thoughts on the asset after the FOMC meeting.

Illustration 1.01

The picture above shows the daily chart of SPX and the setup for a short trade, which involves taking a short position with a breakout below the lower bound of the downward-sloping channel and placing a tight stop-loss order above the lower bound.

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