Persistent Rally Continues

The 03/23/22 blog “Potential S&P 500 – Support Zones” noted that a shallow bottom could be made soon – perhaps in one or two trading days.  As it turned out a bottom was already in place on 03/23/22 as the S&P 500 (SPX), the Nasdaq Composite and Dow Jones Industrial Average  have subsequently made new post 02/24/22 rally highs. 

The daily SPX chart courtesy of Trading View illustrates the progress of the rally.

The SPX is nearing  the Fibonacci .618 retracement level of the 01/04/22 to 02/24/22 decline.  Just above that is chart  resistance at  4595.  It’s possible another short-term peak could be made in this resistance zone – however, stay focused on the bigger picture.

The daily RSI has still not reached the over bought zone. Additionally, stocks and stock indices usually need at least one bearish divergence before a significant price top is in place. Note the RSI action from October 2021 to January 2022.  Also, the RSI current level is  at approximately  the same level as  on 10/18/21 when the SPX closed at 4484.47.  If the SPX can come near repeating what happen after October 2021 it could make a new all-time high.

Note the width of the MACD – Histogram.  Generally, when above the – zero line its  bullish.  Note the bearish divergence at the SPX – January 2022 top.  Think of the MACD – Histogram as a  fuel gauge, and in this case there’s plenty of fuel for the rally to continue.

Summary.

Price  Dimension: Bullish – Elliott wave patterns suggest post Horizontal Triangle thrust up is underway since  03/14/22.

Time  Dimension: Bullish – US stocks are seasonally bullish until late April/early May.

Momentum Dimension: Bullish – Daily RSI and MACD  imply more upside action.

There’s  a high probability US stocks could continue a sharp and steep rally into at least late April.  If so its likely to terrify the bears, and if the SPX can make a new all-time high  many of them could miss possibly the best stock shorting opportunity since  October 2007.

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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