How to know when a relief rally becomes a new bull market?
Two Simple Criteria for S&P 500
The odds for a relief rally were good. There was a chart match against the 1969 analog and as markets traded throughout October it became more apparent that no real sense of panic set in when prices briefly undercut the June lows.
The relief rally scenario is progressing and has traded within 1% of the 3900 - 4000 target for the S&P 500.
When does a relief rally become a new bull market?
It is a good question. For my analysis of the S&P 500— there are two simple technical criteria for a relief rally to stay a relief rally.
The short duration moving average does not cross the medium. The red line (20 day moving average) keeps below the black (50 day moving average)
Prices do not close above 4120— (the intraday high from September 12)
These are easy criteria to monitor and if violated it is likely the market is progressing on an alternate path. For now— I speculate that the relief rally is soon to be approaching its peak and I am maintaining a bearish outlook for the next 3 - 6 months.
Thanks for reading this mid week note— I appreciate you making Lines On A Chart apart of your market reading. If you enjoyed this piece— please consider sharing & subscribing. The next article is planned for Sunday October 30.
How Timely Are The Insights?
Aug 31— it was shared that the market looked like 1969— the environment matched and so did the chart. The article warned of a bearish crossover— that happened the following week
Sept 18— the article reviewed the technical deterioration in the S&P 500 writing of a high probability that the June lows are visited— which occurred the following week
Sept 25— continued the 1969 analog comparison highlighting the double bottom as an area to initiate a relief rally— in progress: rally started October 13 and is progressing towards relief target area
See the weekend article for updated analog chart progression.
At 3900 I anticipate many participants and the media headlines to be convinced that the bear market has concluded— scenarios suggesting further downside will become unpopular opinion— October 16, Bear Market Bottoms
Disclaimer: I am not a financial advisor— this article is not financial advice or a recommendation for any investment— The content is for informational purposes only and to ignite the brain neurons.