SP500: Déjà Vu or Breakout? Dissecting Indicators Underneath The Rally

SPX crossed its annual resistance line, not the case for the other indexes, here are the annual levels for NDX, IWM, DJI, QQQ, all the Magnificent 7, Bitcoin, GDX and Crude Oil. Breadth analysis.

Is $5,110 the New Bullish Bastion for 2024?

The SP500's recent price action has been a head-scratcher. Over the past few weeks, choppy trading produced potential bearish reversal candles right at the edge of the presumed annual support zone at $5,110.

Adding fuel to the bearish fire, the RSI indicated overbought conditions, while the ROC flashed a bearish crossover signal. Despite these warnings, the index defied expectations and moved higher.

There is never an unexplained move in the indexes: One clue was in the VIX, which set a bearish weekly candle last week and it had continuation, that is technically logic.

Deja Vu or Breakout?

The current situation bears an uncanny resemblance to March/April 2023. Back then, a similarly strong support level at $4,050 faced multiple bearish candles that ultimately lacked follow-through. Importantly, the index wasn't overbought at that time.

July 2023: A Cautionary Tale

Fast forward to July 2023. The SP500 reached the next annual support zone in an overbought condition. This time, the index faced immediate rejection, plunging almost back to the previous support level.

What’s Next? - Enjoy The Rally But Stay Vigilant

This is not about bulls or bears, this is about bold felines.