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No Value Levels Increases The Downside Risk For The S&P 500

The S&P 500 Index (SPX) failed to hold its annual pivot at 4,383 at the open on April 22, which I viewed as a sell signal. New 2022 lows are being set today, May 9, 2022. So far, SPX is staying above 4,000. The S&P has been below a death cross since March 14 and failed at its 200-day simple moving average 4,496 on April 21. The weekly chart has been negative since the week of April 22.

The Daily Chart for SPX

The S&P 500 had a 48.9% gain from its October 30, 2021 low of 3,234 to the high of 4,818 set on January 4. The close below the 50-day simple moving average at 4,681 on January 14, 2022 set the stage for downside risk.

The annual pivot at 4,383 failed to hold on April 22, which began the downside momentum to the low being set on May 9. Note that there are no value levels.

The death cross occurred on March 14 when the 50-day simple moving average fell below the 200-day simple moving average.

The horizontal lines on the chart are the semiannual pivot at 4,456, the annual pivot at 4,383 and the monthly risky level for May at 4,350.

The Weekly Chart for SPX

The weekly chart for the S&P 500 is negative with the index below its five-week modified moving average at 4,253. The horizontal lines are the annual pivot at 4,383, the monthly risky level at 4,350 and the semiannual pivot at 4,456. The 200-week simple moving average or “reversion to the mean” is at 3,475.

The 12x3x3 weekly slow stochastic reading is declining at 25.14. The chart becomes oversold when this calculation falls below 20,00.

The Monthly Chart for SPX

The monthly chart goes back to the “Crash of 1987,” which is at the lower left-hand corner of this chart. The green line is the 120-month simple moving average. Note that the S&P 500 is below its annual pivot for 2022 at 4,383, which is the horizontal ling at the upper right of the chart.

The 12x3x3 monthly slow stochastic reading peaked at 96.60 in July 2021. It’s now declining at 53.57 which is negative.

A bear market is a possibility. From the January high of 4,818 to the 120-month SMA at 2,600 would be a decline of 46%.