Struggling to Go Lower – Part Three

The 09/23/21 blog “NYSE – New 52 – Week Lows” noted that the S&P 500 (SPX) 09/20/21 decline low had a bullish divergence of NYSE – New – 52 Week Lows ($NYLOW) vs. the SPX 08/19/21 bottom.

The daily $NYLOW chart courtesy of StockCharts.com updates this internal momentum indicator.

On 10/01/21 the SPX went below its bottom made on 09/20/21. However, $NYLOW had a minor bullish divergence vs. its 09/20/21 reading – overall a double bullish divergence.

The recent bullish outperformance of the Russell – 2000 (RUT) vs. the SPX, the corrective Elliott wave  look of the SPX September decline, and bullish momentum divergences suggest a 7 to 9% correction could be underway.

The main factor for the bearish case is seasonality. October is infamous for US stock market declines.  October is also a month when bottoms are made, and they can come at any time during the month.

The SPX 09/02/21 to 09/20/21 decline was 11- trading days.  Adding 11- trading days to the SPX 09/23/21 short-term peak targets 10/08/21 – when  the important US payroll report is released. If the SPX breaks below its 10/01/21 low, a more significant bottom could be made on 10/08/21.

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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