Bear Market Over? This Level Decides
Rallies similar to the one we've seen from the April 7th lows are not uncommon during bear markets, making next week a critical juncture.
Having navigated the market's volatility over the past three months with remarkable foresight, this publication has provided premium subscribers with signals anticipating key reversals. To illustrate this predictive capacity, consider the following five publications, with dates and titles of the linked content:
February 8th: Vanishing Bounces, Soaring Volatility: Is the Market About to Break?
April 9th: A Study of Bounces Across Six Major Market Corrections
April 12th: Multi-Week Bounce Starting? 3 Indicators to Monitor
While the extensive educational library offers much more special studies, these specific instances clearly demonstrate the anticipatory strength of the technical analysis published, and this last week’s rally presented a high probability of bullish continuation as anticipated:
Each linked publication offers educational guidance with updated charts that can teach you more than a book, making the subscription worthwhile for their constantly updated libraries alone.
Upgrading your subscription grants you access to all the linked content, as well as everything available on the www.SmartReversals.com site, like the Macro and Fundamental Library, and the Educational Content. Access here.
Support and Resistance Levels
With 9 years of market experience, and four in the social media environment (I started on X as @SmartReversals in 2021), I've learned the importance of maintaining neutrality, utilizing the most informative indicators to understand price action, and remaining open-minded to the chart's signals, rather than those from news or, even less so, social media “Herding Behavior”.
To control myself from emotional decisions, I use Support and Resistance levels to set targets, and to set validations of bullish or bearish reversals, as posted on Friday in the previous publication with educational content. For free access use the link:
On Saturday, April 26th, the Weekly Compass shared the following price targets for each security, and their accuracy by Friday, May 2nd was impressive:
Netflix was in the latest Fundamental analysis published on Wednesday (Click here), with Tesla and Google; and effective today, it stays in this publication.
Let’s begin with the technical immersion
Back in December 16th, in the middle of the euphoria, I anticipated a significant 50% retracement of the bull market that began in October 2022, targeting $4800. The low reached thus far has been $4835 🎯🎯🎯. That accuracy is remarkable considering the provocative consideration when everything was in bullish mode.
The market is bouncing in a V shape, most of the move happened in April, and despite of having recovered 65% of the selloff, price action still has a key milestone to accomplish in order to rule out any thesis about a bear market rally.
Why such consideration? isn’t the bear behind us? isn’t the worst behind?: The chart below shows the theoretical bullish candle from April, but at the same time there are two elements to watch:
A bearish MACD crossover is confirmed, far from reset, and at a higher level than the one from 2022.
Previous bear markets have bottomed at the lower Bollinger band in confluence with 50 monthly average, even the COVID crash in 2020 and the Tariff war 1.0 in 2018. The latest bottom barely made it to the 50 monthly average.
So the context is mixed, we see a completion of a Fibonacci pattern that suggests the bottom IS IN, and also a bounce from the 50 monthly average zone that builds on that thesis; on the other hand the MACD crossover is at a higher zone than 2022, and that year printed the highest MACD crossover.
Currently the market is in bullish mode with signs of overbought conditions in the daily timeframe; the question is how sustainable is that? and if the market falls, where can an exit be set before it is too late?.
Today’s publication approaches the current context and after all the editions posted during March and April studying bear markets, I will pick the essential conclusions and provide a rational expectation. Managing risk is key, this week the FED will decide if there is (or there is not) a rate cut, and for sure that will move the market.
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SPX - Weekly Chart, Key Milestone Pending To Invalidate Bear Market, and Price Levels