The Bears have made a significant move, pushing the S&P 500 below the key level of 5,667, which is the highs from July 2024.
Here’s the chart:
Let's break down what the chart shows:
The black candlesticks in the top panel is the S&P 500 index price.
The green and red line in the bottom panel is the Momentum Regime (Daily RSI).
In a bullish regime, the RSI often exceeds 70 during rallies and finds support around 35-40 during corrections. In a bearish regime, it drops below 30 during sell-offs and doesn't reach overbought levels in counter-trend rallies.
The Takeaway: Over the past few months, I've been sharing my bull market checklist, emphasizing the importance of the 5,667 level in the S&P 500 for the bullish trend. However, after yesterday's trading, the bears have pushed the S&P 500 below this key level.
Not only was this price level breached, but the S&P 500 also fell below its 200-day moving average, and the momentum shifted to a bearish regime. As a result, I conducted an emergency review of my bull market checklist. Unfortunately, the findings are not favorable for the bull market: we lost another two significant components—the S&P 500 price level and momentum regime. This has now reduced the bull market checklist to just 25%.
The bears have taken control.
This environment does not promote risk-seeking behavior. This is concerning for risk assets, as we have now entered a phase where many risk assets have completed or are completing topping formations.
Will we see more selling pressure from the bears this week, or will the bulls finally show up?
Grant Hawkridge | Chief Aussie Operator, All Star Charts
ICYMI: Retail earnings are rolling in, and a clear trend is emerging. What does it mean for the market? Jeff Macke breaks it all down — Read his latest take here.
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