Welcome to March 2022, what is in store for the stock market. Let's take a look.
Looking at the 2 hour chart of the SPX, I begin to see some signs of bullishness in the short term. It made higher lows which is usually a good sign for the index.
Notice how it is also making an ascending triangle type of pattern. It is breaking out of this pattern and as long as SPX stays above the top of this pattern, then we can expect more bullishness in the short term for the SPX.
Of course if SPX breaks below the lower uptrend line, then the power of the pattern will be negated and we will probably see downward moves.
The S&P 500 is still below the 20 MA, 50 MA and 200 MA. At this moment it is not conducive for longs from a trend following view. A nice bottoming tail recently hints of a possible reversal but we really really need to see it trade back above the 20 MA. Continue to watch the downtrend line.
Let us begin March's analysis with a look at the RTS Index of Russia. In just a few days, the index crashed dramatically. History tells us that when a country invades another country, it is usually bad for its economy. War will cause a lot of economic hardships. There will also be a lot of spending as well.
In the case of Russia, there will be tons of sanctions.
The S&P 500 has recovered a bit from its low. But my eyes are on the downtrend line above. Unless S&P 500 breaks above the downtrend line then we should continue to be cautious. If it is able to break above it, then and only then can we be certain of a bottom.
As I was looking at the markets, I saw that the XLE has broken out of a consolidation. We can draw a box for the breakout. As long as XLE stays above the lows of the box, it will be good for oil stocks in the near term.
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