Have Stocks Found a Bottom?
The S&P 500 has been skidding lower since late July, but now there may be signs of a bottom.
The first pattern on today’s chart is the falling channel along the highs of September and the lows of August and late September. SPX seems to be holding the bottom of this corrective formation.
Next, consider the price action in early June after Congress voted to raise the debt ceiling. The index had a tight consolidation pattern before continuing to a 52-week high. Notice how the post-breakout low held last week.
Third, SPX dipped under its previous low on Wednesday before reversing higher. The resulting “hammer” candlestick pattern -- following a slide -- may signal a bullish reversal.
Fourth, stochastics are turning up from an oversold condition.
Finally, sentiment may be overly negative. Less than 28 percent of respondents termed themselves bullish in the latest survey by the American Association of Individual Investors. Almost 41 percent were “bearish.” Both of those matched readings in May as Wall Street worried about the debt ceiling.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is the falling channel along the highs of September and the lows of August and late September. SPX seems to be holding the bottom of this corrective formation.
Next, consider the price action in early June after Congress voted to raise the debt ceiling. The index had a tight consolidation pattern before continuing to a 52-week high. Notice how the post-breakout low held last week.
Third, SPX dipped under its previous low on Wednesday before reversing higher. The resulting “hammer” candlestick pattern -- following a slide -- may signal a bullish reversal.
Fourth, stochastics are turning up from an oversold condition.
Finally, sentiment may be overly negative. Less than 28 percent of respondents termed themselves bullish in the latest survey by the American Association of Individual Investors. Almost 41 percent were “bearish.” Both of those matched readings in May as Wall Street worried about the debt ceiling.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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