Entering the Danger Zone

Today 08/11/22 the S&P 500 (SPX) entered what I call “The Danger Zone” this is a price and time  area where the SPX could make a significant top.  An examination of SPX, monthly, weekly and daily momentum indicators illustrate clues that a top could be forming. 

The monthly SPX chart courtesy of Trading Views shows the long – term view.

This  is  an update of the chart illustrated in the 07/30/22 blog “Market Fuel Gauge” the monthly Stochastic is  now at the same general area as  the SPX March to May 2008 rally.

The weekly SPX chart shows the Intermediate – term view.

The upper – blue line is in the overbought zone.  The lower – orange  line has just reached the edge of overbought – 80%.  Both lines could remain in the overbought zone for several weeks.   

The daily SPX chart illustrates the short-term view.

The  time zone for a top is  from 08/17/22 to 09/01/22  and  based upon prior significant August peaks.  The price zone of SPX 4,235 to 4,320 is  based on the declining  trendline connecting the January and March  tops, and the price area  around  the double peak made on 04/28/22 and 05/04/22.

The daily RSI is  now at 67% which is  the highest level reached in 2022.  Typically, significant tops  come when the RSI has reached the overbought zone and has at least one bearish divergence. 

In the very short-term based on momentum and intraday price structure the SPX appears  it could continue to rally – at least into 08/17/22.

Soon US stocks could be making a very important top.

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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