SPX Weekly Chart Shouts "Sell": More Warning Signs Flash as...

SPX Weekly Chart Shouts "Sell": More Warning Signs Flash as Bullish Momentum Wanes

The S&P 500 (SPX) appears brewing a pullback based on a confluence of technical indicators and market sentiment.

Here's a breakdown: Overbought RSI & Price Disparity: The RSI indicator remains elevated, suggesting the price is overbought relative to its recent trend.

Bearish Candle Confirmation: A gravestone candle emerged this week, following an indecisive candle the prior week. This reinforces the potential for a reversal.

Rate of Change (ROC) Confirms Downtrend: The ROC solidified its bearish crossover, further emphasizing the weakening momentum.

Historical Context: The current setup is similar to six previous instances marked on the chart. In each case, a bearish candle materialized, including evening stars (1) or shooting stars at the exact reversal moment (3, 4) or warning one week before (6). Two Bearish Candles vs. Two Bullish Ones: The presence of two consecutive bearish candles on the SPX chart stands in contrast to the two consecutive bullish candles observed in December 2022 (marked by a green arrow), suggesting a potential reversal.

Fear Gauge Adds Fuel to the Fire: The CNN Fear and Greed Index currently sits at 71, indicating a greedy market, which often precedes corrections.

Resistance Turned Support? Re-evaluating $5110: Back in January 1st, I highlighted the importance of the $5110 level as a potential source of turbulence and pullbacks. While the price has indeed struggled around this zone for two weeks, the lack of bullish signals on both weekly and daily charts casts doubt on its transformation into support.

Potential Downside Target: A minimum retracement could see the SPX revisit its 10-week moving average (10MA), currently at $4,997.

https://x.com/SmartReversals/status/1769353330109657482?s=20