Further to our leading risk indicator analysis Leading Risk Indicator Struggling. A Bearish Period Ahead? we want to look at the broad market index S&P 500 to understand the ongoing vs. potential trend(s). Interestingly, the S&P 500 chart is now right at a make or break level.
We have to start by mentioning the source of this chart. This is the SPX chart with our own annotations, and the source is the weekend edition of our Trade Alerts service. This is just one of the many charts that our members receive during the week (special edition in case the market takes an unexpected turn) or in the weekend edition (educational updates).
The green rising trend is the one that started right after the cataclysmic Corona crash.
The light red (short) channel is the one that may have started on June 10th, right after the U.S. Fed speech, after which some sudden and brutal volatility kicked in for a few days.
The S&P 500 is really testing the intersection between both patterns.
In other words bulls and bears are struggling to win the battle.
The jury is out, the market has not found a direction yet.
We will follow the ‘events’ on this chart closely, as well as on our proprietary ‘crash indicator methodology’, to understand the direction of the market. This will result in a bullish or bearish short term position in our Trade Alerts service. For now, it looks like our medium term oriented investing positions are the right ones, and regardless of the direction of the S&P 500 we should have 2 winning positions in our Momentum Investing portfolio.
Do you like our analysis? You can follow our work with our look-over-the-shoulder investing method and strategy as per our Momentum Investing service. We tend to take one gold position next to one technology position. Moreover, on the short term timeframe, we apply a proprietary method with short term trading signals in the S&P 500 which delivered +80% so far in 2020.