The Big Kiss Off

The chart below is a daily SPX since last November.

Notice that a “tops line”  defines each of the 4 pivot highs in this year-old bear market.

The “tops line” is created by paralleling a line across the tops from a “bottom line” forming a rising trend channel. These define the major contra-trend moves of 2022.

When there is a spike low where the close is nowhere near the low, the “internal” low is chosen.

For example, in the case of the trend channel corresponding to the October 13^th low of the year, the “bottoms line” starts a few days before the October 13^th low-- it starts at the “internal low” which is often the closing low for the move prior to the Spike & Reversal.

The light blue line running thru the chart is the 20-day moving average.

Notice that when the price has broken below each trend channel, there has been a consistent knee-jerk snapback that backtests the bottom of the broken trend channel.

In each instance, this has occurred where the 20-day moving average is rolling over.

This is The Kiss…where price kisses the intersection of the 20-day ma and the bottom of the trend channel.

As you can see, this same setup presents should the SPX rally to the 3950-60 region over the coming hours/days.

Hopefully, you benefitted from my warning about the 4080 square-out top.

Mr. Market was kind enough to give a second chance to dodge a bullet on December 13^th.

That is when the second mouse got the cheese… the “square-out” cheese.

Our presumption was the SPX would find support at the 50% retrace of the October/December range…

At 3795.

It did, on Monday.

Tuesday backed and filled.

Wednesday was a Gap & Go.

The clear target objectives are 3915 and 3950 region.

These are Fibonacci retracement levels (38.2 and 50%). It is important to be aware that there is a gap at about 3960, so if the other two levels are reached, then potential exists to Phil D Gap.

If we do get a three-day or so rally, my expectation is a strong move back down that could break the October low.