When a Bullish Signal Appears in a Late-Stage Rally
This signal usually appears when price is bouncing from oversold conditions, but that is not the case this time.
Last Friday, the S&P 500 experienced a rally of rare magnitude, producing a powerful breadth signal similar to the one observed on April 9th. The advancing volume on the NYSE reached 91.3%, indicating that an overwhelming majority of trading was concentrated in rising stocks.
Statistically, this "90% upside day" is a historically bullish signal, having occurred only fifteen times since 1980. Following these events, the S&P 500 has a win rate of over 80% one month later and 83% six months later.
However, two critical points are worth noting. First, in the 20% of cases where the signal failed, the index fell by an average of -10% one month later. Second, this signal is occurring today in a mature bull market, not during a bounce from a major selloff like the one on April 9th.
Let's study the current context to determine which historical precedent is more comparable, and after this research, we will study the market today considering the recent NVDA earnings and overbought conditions in the SPX, NDX, and SMH.
Find all my market research and educational content into a single, comprehensive guide. This guide covers everything from technical, macro and fundamental indicators to options, trading psychology, and macro analysis. It also features dedicated sections on advanced topics like Fibonacci, Elliott Wave theory, and market breadth. The section on my special market studies anticipated since April the rally we are now navigating.
This publication consistently analyzes price levels for the following securities to provide a broad market perspective and empower your trading decisions; at the bottom of this publication, in the paid section, you will find the key support and resistance levels for :
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, SH, PSQ
Major Stocks: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, BRK.B, LLY, UNH, AVGO, COST, PFE, PLTR, NFLX
Crypto & Related: Bitcoin, ETH, IBIT, MSTR
Leveraged ETFs: TQQQ, SQQQ, UPRO, SPXU, URTY, SRTY, UDOW, SDOW
If you’re interest in some of these securities, this publication is for you.
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Let's analyze what a "90% volume up day" means by studying 15 charts. This will highlight the critical difference between when the signal occurs in a mature bull market, like today's, versus during a bullish reversal after a selloff, as we saw on April 9th, and then we will continue with the market notes and S/R levels for over 40 securities.
This publication has my target for the end of the year for the SPX.