SPX Daily Analysis - 7 Mar 2025 Pullback or Breakout?
• The daily candlestick was a bear bar with a prominent tail below, closing above the March 4 low.
• The market gap lower at the open and formed a pullback (bounce) in the first two hours. The market then reversed lower to retest the March 4 low and broke below it. The breakout lacked follow-through selling and stalled around the March 4 low area.
• The bulls see the market trading in a broad bull channel and want the move to continue for months. They want an endless pullback bull trend.
• They want a retest of the all-time high (Dec 6) followed by a breakout and trend resumption. They see the current move (Mar 6) as a bear leg within the trading range.
• They want a reversal from a double bottom bull flag (Jan 13 and Mar 6), a wedge bull flag (Nov 9, Jan 13, and Mar 6) and a wedge (Feb 25, Feb 28, and Mar 6).
• They hope the bottom of the 22-week trading range will act as support. They want a failed breakout below the January 13 low.
• At the least, they want a retest of the middle of the trading range (around the 20-day EMA).
• They must create consecutive bull bars closing near their highs to show they are back in control.
• If the market trades lower, they want the November 4 or October 3 low to act as support.
• The bears got a reversal from a higher high major trend reversal, a wedge top (Dec 6, Jan 24, and Feb 19), and a smaller double top (Jan 24 and Feb 19).
• They see the market as being in a 22-week trading range.
• They got a bear leg to retest the January 13 low and hope to get a breakout followed by a measured move based on the height of the 22-week trading range.
• So far, the breakout below the January 13 low is not yet strong.
• The move down is in a tight bear channel which increases the odds of at least a small second leg sideways to down after a pullback.
• The move down has a lot of overlapping candlesticks which also indicates that the bears are not yet as strong as they hoped to be.
• If the market trades higher, they want the bear trend line or the 20-day EMA to act as resistance followed by a retest of the recent leg extreme low (now Mar 6).
• So far, the market is trading in a 22-week trading range.
• The SPX broke below the January 13 low (Mar 6) but the follow-through selling is still somewhat limited.
• The selling pressure in the move down is stronger (consecutive bear bars, bigger bear bars) than the weaker buying pressure (bull bars with no follow-through buying).
• The move down is strong enough for traders to expect at least a small second leg sideways to down after a pullback (bounce).
• For now, traders will see if the bears can continue to create follow-through selling below the January 13 low.
• Or will the market stall around the current levels and form a minor pullback (bounce) instead?
• The bulls need to create consecutive bull bars closing near their highs to show that they are back in control.
• The bears must create a strong breakout below the January 13 low with follow-through selling to convince traders that a breakout could be underway.
