SPX to 2800 - Monthly view
As my previous post suggested I’m expecting $2800 level to be reached (unless FED reverses QT).
On monthly chart it’s visible that price bounced off of 50EMA for now, but once it closes below it, 150 EMA should act as next support level around $2800.
PPO oscillator hasn’t even reached negative territory yet (as it did in 2002/2009).
What seems like a shot as of now, price could decline as much as to $1600 levels to test prior highs set in dot.com and housing bubbles. (Interesting math here: 2800 is about 42% off of 4800 (top); 1600 is about 42% off of 2800 - cumulatively 66% decline)
My main case for decline is based on FED’s monetary tightening policy. They are currently just starting QT and SPX already have dropped almost 30%. If they take liquidity out of markets, there won’t be any large enough buyers to stop the bleeding. I do think there could be black swan events coinciding with market drops, but at the end FED is the driver.
Just to add a bit of rant: with almost 30% decline, companies just starting to talk about earning misses, VIX hasn’t even really spiked; there is no panic in sight; retail investors are still in the “buy the dip” mindset - it’s a bear market for F sake!; feels like everyone is taking about a “pivot” - based on what?
It’s going to be a bumpy ride down.
On monthly chart it’s visible that price bounced off of 50EMA for now, but once it closes below it, 150 EMA should act as next support level around $2800.
PPO oscillator hasn’t even reached negative territory yet (as it did in 2002/2009).
What seems like a shot as of now, price could decline as much as to $1600 levels to test prior highs set in dot.com and housing bubbles. (Interesting math here: 2800 is about 42% off of 4800 (top); 1600 is about 42% off of 2800 - cumulatively 66% decline)
My main case for decline is based on FED’s monetary tightening policy. They are currently just starting QT and SPX already have dropped almost 30%. If they take liquidity out of markets, there won’t be any large enough buyers to stop the bleeding. I do think there could be black swan events coinciding with market drops, but at the end FED is the driver.
Just to add a bit of rant: with almost 30% decline, companies just starting to talk about earning misses, VIX hasn’t even really spiked; there is no panic in sight; retail investors are still in the “buy the dip” mindset - it’s a bear market for F sake!; feels like everyone is taking about a “pivot” - based on what?
It’s going to be a bumpy ride down.
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