S&P 500 – Decline Update

The 03/31/22 blog noted that the S&P 500 (SPX) low on 03/31/22 was just above the Fibonacci .236 retracement of the rally from 03/14/22 to 03/29/22. The next day the SPX broke below the .236 support level yet failed to reach the .382 support zone. 

The 5 – minute SPX chart courtesy of Trading View updates the price  action.

The decline since the 03/29/22 peak appears to be an extended five wave Elliott Impulse pattern.  After the bottom on 04/01/22 the subsequent rally was larger and longer than any rally during the 03/29/22 to 04/01/22 drop.  The impulsive look of the drop after 03/29/22 and the size of the late 04/01/22 rally strongly imply that either Minor wave “A” or “1”  bottomed on 04/01/22. 

The late  04/01/22 rally into the close had the clear  three wave structure of a Single Zigzag correction. Its possible the rally is  complete as of the close on 04/01/22.  If the rally continues, the 30 – second SPX500 – Point & Figure (PF) chart reveals areas of potential resistance.

Trading View has an index called SPX500 its symbol is also SPX500. This index is  like a continuous S&P 500 futures chart yet its priced at almost the same level as the SPX.  The SPX500 can sometimes  be helpful in detecting support and resistance levels  especially when using a PF chart.

On 04/01/22 the SPX500 late day rally peaked just below a PF price cluster, just above this cluster is  the .382 retracement level.  If on 04/04/22 the SPX500 pushes above the .382 level there is no significant chart resistance until the .618 retracement level.  Note that this level is close to a double top made on 03/31/22.  Just above the double top is  a  PF price cluster.

The rally since the SPX 03/14/22 bottom has been strong and steady – the bulls are eager to buy.  Its logical to expect that the rally after the 03/29/22 to 04/01/22 decline could also be strong. If there’s  more upside action after the SPX 04/04/22 open, the area around SPX 4590 is the most likely resistance zone to halt the rally.   

Factors that imply the SPX decline from 03/29/22 are not complete.

  1. Impulsive look of the 03/29/22 to 04/01/22 drop.  Declining impulse waves are usually the first phase of  continuing downside action.
  2. The bottom made on 04/01/22 was not at a Fibonacci support level which leaves open the possibility for a drop to the next Fibonacci support near SPX 4455.

If in  the next few trading days there’s a drop into the 4455 area, it could present an opportunity to establish long positions.

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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