Filtering all of that out, we have anticipated a seasonal bounce or rally due to market sentiment well-biased to over-bearish, oversold conditions, and the seasonal pattern for SPX that has turned up.The mechanics of a seasonal rally theme noted above, along with ‘tax loss’ and ‘January effect’ seasonals and the potential for a pullback by the global market counter-party, the US dollar, begged active bears to consider not being greedy for more downside as SPX plunged into thick support.
I am no Elliott Wave TA, but I would gather that if this were to be a more routine correction it would have corrected A-B-C down and bottomed with the early October test of the uptrending SMA 200.
As you can see, clear visual resistance coincides with the 50-day moving average . If that and point ‘4’ are taken out only then does the seasonal rally theme really start to pack a punch. We do, after all, allow for SPX to test its all-time high , if not temporarily overthrow it, for a year-end grand bull suck-in.
Everybody hated stocks when NFTRH was writing contrary bullish a year ago and if a seasonal rally plays out more people will love stocks, thinking the worst is over. In that situation, I’ll speculate bullishly in rotational areas that look best per the current macro backdrop . But we will remain firm in anticipating what is next. This is not likely to be a sustainable bull market resumption.
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