SPX Short Term Bearish: RSI Divergence, Doji, Hindenburg Omen

4 Jun

The S&P500 looks bearish in the short term. There is a bearish RSI divergence in the weekly and daily chart, with price increasing and RSI decreasing. The weekly momentum is slowing down. The weekly doji candle on 20 May can indicate a local top and the beginning of a short-term correction. The triggering of the Hindenburg Omen and Titanic Syndrome signifies increased risk in the markets. The expected rate cuts in 2024 can cause the market to have a short-term negative reaction, as happened before by 35% around the 2019 Fed Pivot, 58% in 2007 and 51% in 2000. According to the CME FedWatch tool, there is currently an 18.5% probability of a rate cut at the 31 July FOMC meeting and a 65.7% probability at the 18 September meeting. The closing below the 21W EMA can act as confirmation. A potential bottom can be a wick towards the future 200W EMA at around $4350, but the correction might not be as significant. A long term bullish perspective remains, with a potential significant uptrend starting in November - December 2024 due to rate cuts and increased liquidity. Not financial advice, do your own research, do not take any actions based on this idea.