Doji + RSI Divergence - Warning Sign?
The SPX Printed an Exhaustion Setup - Stock Market Update Including LLY, AVGO, PLTR, TSLA, NDX, IWM, BTC, and More.
On May 17th, in the Weekly Compass (click here), I anticipated a visit to the 40-week moving average for the S&P 500, followed by a bounce. This expectation was based on similar price structures observed in previous V-shaped recoveries. The price did indeed decline, bottoming out at $5,767 on May 23rd, just 22 points below the 40-week moving average for a single hour, before subsequently bouncing.
Last week, on May 28th, I posted a special analysis focused on Gaps, considering the one at $5,720, that is a must read for people like me who pay attention to gaps.
My opening frames today’s publication since some securities are showing signs of exhaustion, and if they confirm some reversals setups it is worth remembering some studies posted during the last months answering questions like:
How Long Do Price Gaps Remain Open?
The study gathers 20 years of gaps for SPX, and a pattern for the gaps that stay open for long.
How to Find Bottoms in Bear Markets?
Common patterns observed in the lows of the 2008, 2000, 2018, 2020, and 2022 bear markets comparing their structure with the beginning of April 2025.
Patterns Ahead Bounces in Six Bear Markets
This study shows common characteristics of bear market rallies and the technical condition that is common for when the bottom is in and the rally is not from a bear market anymore.
In today’s market update, I will connect the findings on those three studies with the current price structure for the S&P500 (SPX) and the Nasdaq100 (NDX), also the market update includes the charts for TSLA, PLTR, IWM, GLD, BITCOIN, and the current price updated among the S/R levels provided last Friday (click here). Upgrade to paid your subscription and unlock all the content, including the links above.
SmartReversals is a publication that, for over a year, has consistently delivered three weekly publications to its premium subscribers. One of these offerings includes the meticulously set support and resistance levels for the week ahead. When I started in March 2024, I provided levels for 20 securities, a number that has now grown to 40. This expansion is a direct result of the approach's proven accuracy and usefulness for both traders and investors. Today, I'll begin by analyzing two newly added mega-cap securities ( LLY 0.00%↑ and AVGO 0.00%↑ ), which will also illustrate my approach for the SPX, NDX, NVDA, TSLA, PLTR, BITCOIN, GLD, SLV, NFLX, MSFT, AAPL, BRKB, and other mega-caps analyzed weekly in the premium section of the publications.
LLY: This non-tech mega cap, that is part of the top 10 or top 15 companies in the SPX by market cap, has been hammered after the last earnings report, finding once again support at the $700 zone (November 2024, April 2025, and May 2025), which is the lower edge of the volume profile. The recent MACD crossover suggests this bounce has more fuel.
Right now the price is facing the 50 daily moving average in confluence with the upper Bollinger band. Some consolidation is possible but not guaranteed. LLY is in bullish mode considering its price above $732.6, the weekly central level provided last Friday, and after crossing the first bullish target $750.9, the price managed to close today right at the monthly central level $765.3, which is on confluence with $764.2, the next weekly level.
The price action during the last hours today presented a small retrace, not enough to set a shooting star, $750.9 can be now be the reference to manage risk for long positions and more risk aversion, otherwise the same central level $732.6 can continue as the reference for a line in the sand.
Monthly levels wise, this move can reach $821 if the resistance zone mentioned (50DMA, Bollinger and monthly+weekly level) is quickly overcome.
For educational content about the indicators mentioned, click in the links according your interest, the library uses the securities analyzed in this publication with real life examples: Support & Resistance Levels, Stochastic, MACD and RSI oscillators, Candlestick patterns, Moving averages, Bollinger Bands, Volume Profile. For the complete library, including studies of reversals and technical patterns in the stock market, click here.
AVGO: Broadcom has reached new all time highs, the V shaped recovery is complete, and the last candle is a shooting star crossing the higher Bollinger band which suggests a consolidation is imminent. The RSI adds more signs of overheated conditions.
Broadcom is far above its $239.8 central level set a bullish tone for the week when the price open above that it. Today, the rejection occurred at the resistance level $263.3, after a breach that lasted 30 minutes when the market opened today.
$254.7 can be used as a reference to manage risk for a conservative approach, but so far $278 and the $310 levels cannot be ruled out for the coming weeks. Remember that Broadcom has very strong fundamentals, they were posted at the end of 2024. For access, click here.
The analysis continues for SPX, NDX, IWM, GLD, PLTR, TSLA, and BITCOIN, with a summary of the updated levels for NVDA, GOOG, MSFT, AAPL, SLV, NFLX, QQQ, SPY, DIA, ES=F, NQ=F, and other securities included in the Weekly Compass.
SPX - How Risky is the Current Divergence?