Fibonacci Price and Time Connections – Part – Two

The 05/08/22 blog “Fibonacci Price and Time  Connections” noted  broad leeway for support on the S&P 500 (SPX) could be between 4035 and 3985.  Today 05/09/22 the SPX low was at  3975.48.  Leeway is  not an exact science.  The SPX 2010 decline was the source for projecting a possible 2022 support area.  In 2010 the SPX declined 17.1%, today 05/09/22 the SPX 2022  drop  reached  17.5%.  The ratio is  17.1/17.5 = .977 which is  close to equality. 

The Fibonacci time  forecast  is  off by a wide margin.  Doubling  the time of the SPX 2010 decline of 47- trading days  is  94 – trading days and has a bulls eye  target date of 05/19/22. 

Today all three main  US stock indices made new 2022 decline lows. The NYSE new 52 – week lows erased all of the bullish divergences.  The Nasdaq new 52 – week lows still has one bullish divergence vs. the 01/24/22 bottom.  The Bullish Percent Indexes for the S&P 500 and Nasdaq 100 still have bullish divergences.

One momentum indicator shows that the SPX is  deeply oversold.

The weekly SPX chart courtesy of BigCharts.com illustrates  the Slow Stochastic.

The weekly SPX chart courtesy of BigCharts.com illustrates  the Slow Stochastic.

Both weekly Slow Stochastic lines are below the 15% level – this is the most oversold reading since the SPX December 2018 bottom.

Could the 2022 decline be  the start of a multi- year bear market?  It’s possible, but even if a major top is  in place the deep oversold condition strongly implies a multi- week rally that could retrace 60 to 90% of the January to May decline.

An important bottom may have been made on 05/09/22, if not the deeply oversold condition implies  only  marginally lower prices.   Stock market bulls could be on the cusp of a strong counterattack.    

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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