With the sell off, S&P 500 index has fallen close to its 28 week moving average of 1976. Looking back at early April and late July, we can observe the similar one week sell off in the weekly chart below. If the past experience is of any indication, whether S&P 500 index can rebound from its support next week is important to the continuation of this uptrend.
As the sharp sell-off in stock prices is caused by the collapse in oil prices, let's look at the daily chart of the $WTIC. The price of oil has come down since July, and the rate of falling has increased and reached the maximum as shown by the blue lines. At the end of this selling phase, we usually can see the price stabilized and rebound occurs. In the daily candle stick chart, this will happen when the "hammer" pattern shows up and the "MACD" gives a positive cross over.
Weekly chart of S&P 500 Index |
Daily chart of light oil price |
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