So Far, So Good; Some Notes on the S&P 500 (And Relata)

So far, things seem to be going to plan. I will list a few observations that I can make so far.


The S&P 500

$SPY has broken out of the wedge I pointed out here:

SPY

It remains below the April ’21 gap, which even after all this time, is now serving as a magnet. Amazing. It won’t take much to get us above it.

SPY

It has also formed a good-looking inverse head and shoulders pattern, and I expect this one to work. There is an important trend line between here and its target. We may rally to the trend line into a close next week and then gap over it in order to reach the target:

SPY

It has also recaptured it’s bull flag, and if it can stick, then this week was a fakeout:

SPY

As a reminder, the bull flag backed out is this (classic bear trap if this sticks):

SPY

It counts well as an impulse off the lows (with today’s gap fitting into the 3rd [red] of 3 [orange] of 1 [blue]), and the minute (blue) 3 gives a target a bit higher than the inverse, so either is possible:

SPY

Less likely but also possible is that we’re still in minute (blue) 2 and we need one more pullback to complete that:

SPY


Relata

The $VIX wedge never broke out, and the upper fanline has been lost. A rally here in equities can cause this to get crushed to the lower fanline:

VIX

The inverse pointed out on $BTC (here) is developing nicely. It’s recaptured its neckline and could accelerate at any moment. Strength on this over the weekend will be a good sign.

BTC

Breadth was otherworldly, with advancers outnumbering decliners by over 7:1 at one point. That is extremely rare. (it’s happened only three other times in the last two years or so: 12/7/21, 3/1/21 & 6/12/20—two of these are relief rallies, yes, but one of them also led us to the meltup in 2020).


In Sum: Today was a good start. The technicals presented above can all support a continuation of a powerful rally. We’ll need more than a 1.5-day wonder to prove it, so I hope we get continuation next week (and I think we will).


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