Final week, we skilled one of many greatest bullish intraday inventory market reversals in fairly a while. On Wednesday, September 11, the inventory market was reeling and heading down a darkish path. On the lows, the SPX 500 was off almost 2% on fairly heavy turnover, most of which occurred within the first hour of commerce.
As soon as the lows from the prior week have been tagged (at 5,406), it was like we hit a goal. The SPX 500 instantly gathered a head of steam, managed to push by way of short-term resistance, and completed increased by almost 55 factors (about 2.7% increased than the low).
On Thursday and Friday, there have been loads of alternatives for followthrough on that daring reversal, and people alternatives have been seized. The SPX 500 is now lower than 1% away from an all-time excessive.
Huge inventory market reversals are uncommon however constructive
So why did the index make a pointy U-turn on Wednesday at that specific time and worth?
There is no such thing as a clarification until you have a look at the chart. The world round 5,400 has been a great place for consumers to step in. In order that violent transfer down on excessive volatility was sufficient for the consumers to step in aggressively as soon as the promoting was completed.
This sort of inventory market reversal is a uncommon occasion. Nonetheless, the statistics from a giant reversal day are strongly in favor of the bulls within the short-, medium-, and long-term. Whereas seasonal developments aren’t within the bulls’ favor, we might merely look to final Wednesday as an necessary occasion that saved the bullish uptrend alive.
I charted out the weekly SPX 500 and located some ranges the place the index could possibly be headed.
First up are these all-time highs at 5,670 or so. Then I see it hitting 5,700 and maybe 5,850 as the subsequent goal areas.
May the index take a look at of these lows from Wednesday on the 5,400-5,410 space? It is vitally doable with the subsequent pullback. Simply remember the fact that it would really feel like a catastrophe. The bulls shall be stuffed with remorse when there ought to be a “purchase the dip” mentality. Nonetheless, any pullbacks ought to be thought of shopping for alternatives.
