Possible Major S&P 500 – Bottom October 2023

Seasonal patterns for stocks are bearish until October.  A break below a strong support zone could trigger a mini – crash bottoming sometime in October 2023.

The recent blog “S&P 500 – Support Levels – 09/20/23” noted, (The first support area is the double bottoms of 06/26/23 and 08/18/23.  The important level is 4,328.08 made on 06/26/23, a break of this low opens the door for a move down to at least the low 4,200 area.) 

On 09/22/23 the S&P 500 (SPX) broke below 4,328.08, the next support level in the low 4,200 – upper 4,100 area is formidable.

The daily SPX chart courtesy of Trading View examines that support zone.

There are three factors indicating potential support at or near 4,200, the first is the rising trendline connecting the October 2022 and March 2023 bottom.  A break below the trendline could be like a small pre – earthquake prior to a main earthquake.     

The next support factor is the Fibonacci .382 retracement of the October 2022 to July 2023 rally, which is at 4,180.96.

Very near the Fibonacci retracement is the 200 – Moving Average (MA) which as of 09/22/23 was at 4,190.91.  This third support factor is probably the most important because most if not all U.S. stock fund managers measure their performance vs. the SPX.  

These three factors in proximity represent potentially powerful support.  There are three reasons to initiate stock buying, a bottom could form.  Powerful force is needed  to break powerful support.   Panic could create that force triggering a mini- crash. 

The weekly SPX chart illustrates where a mini – crash could bottom. 

The most common Fibonacci relationship in Elliott wave – Zigzag or Double Zigzag corrections is equality.  Where the first phase, in this case wave (A) is equal to the third phase wave (C).

Intermediate wave (A) was 1,327.04 points.  The presumed Intermediate wave (B) top was 4,607.07 minus 1,327.04 targets 3,280.03. 

A more interesting bottom target is the peak made in February 2020 at 3,393.52.  Sometimes prior significant resistance points later become significant support.  Also, 3,393.52 splits the difference between the October 2022 bottom at 3,491.58 and potential Fibonacci support at 3,280.03.

Near – term the SPX appears to be trending to the low 4,200 area.   If it can reach this zone and  does not hold – the bulls could be in a lot of pain.