S&P 500 Macro Update - Quadruple Bearish RSI Divergence
When the S&P 500 moved above its 200 day moving average, I no longer had any reason to be bearish anymore and and as the price action shows, we had a very big rally after that. However, it is interesting to note how we are still respecting this ongoing monthly bearish RSI divergence. We could even create a quintuple divergence if we end up creating a slightly higher close than the last one. There are also similar divergences in the weekly chart. Could it be that we will put in an lower low despite recently creating a higher high?
History shows that this is indeed possible and the 2008 financial crisis took out the previous dot-com bubble low after creating a slightly higher high/double top. If we do end up getting another crash that takes out the March lows then the support area seems to be quite obvious. The 61.8% Fib level drawn from the financial crisis low is lining up nicely with the 200 month moving average and it is possible that we could retest area.
This could theoretically coincide with some kind of uncertainty in the markets due to unclear US election results. However, I am only giving this scenario a 60% probability because of how manipulated the S&P 500 is and we all know the "money printer goes brr" meme. On the other hand, I also believe that you can only manipulate the markets so long before a violent counterreaction ensues. This bearish scenario will be invalidated if the bearish divergence is taken out so we will have to see what happens.
See you in a future update!
History shows that this is indeed possible and the 2008 financial crisis took out the previous dot-com bubble low after creating a slightly higher high/double top. If we do end up getting another crash that takes out the March lows then the support area seems to be quite obvious. The 61.8% Fib level drawn from the financial crisis low is lining up nicely with the 200 month moving average and it is possible that we could retest area.
This could theoretically coincide with some kind of uncertainty in the markets due to unclear US election results. However, I am only giving this scenario a 60% probability because of how manipulated the S&P 500 is and we all know the "money printer goes brr" meme. On the other hand, I also believe that you can only manipulate the markets so long before a violent counterreaction ensues. This bearish scenario will be invalidated if the bearish divergence is taken out so we will have to see what happens.
See you in a future update!
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