Charting the S&P 500: Here's the New Battleground for the Index
After a strong week, markets are still not out of trouble.
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One would think that after such a robust move this past week the bulls would have suddenly taken the ball from the bears. Well, according to the chart, that just is not true yet. There are still plenty of reasons to be concerned, and the chart is just one of them.
The pullback to the broken purple line, which we had kept in place for quite a long time, really is the new battleground. That area is outlined by the yellow box. Notice the most recent candle turned pink, so still cautiously bearish. However, the trendline drawn was tested this past week and was successful, so there is hope the next move is higher.
MACD (moving average convergence/divergence) still is on a bearish signal, so it will take some weeks to turn this upward, while stochastics have turned up and the Chaikin money flow has drawn a line in the sand at the zero level and has slowly curled up.
We are weeks away from declaring an "all clear" signal and more upside. As we rumble through this bearish market we'll look for signs of improved action and continuation, but for now it's a range-bound market.
