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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.

Dots

* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Winter Cat

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* Wed. Nov. 30 @ 2:00 pm ET - Beige Book Report
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* Wed. Jan. 4, 2023 @ 2:00 pm ET - FOMC Meeting Minutes
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*** CLICK HERE for link to Economic Calendars for all upcoming events.

Sunday, October 02, 2022

SPX: Q3 Wrap-Up & Outlook For Q4 2022

* See UPDATE below...

Further to my posts of September 30 and September 24, the following will summarize SPX market action for the month of September, Q3 and year-to-date.

Please refer to the following three charts...namely, the yearly, quarterly and monthly timeframes for the SPX.

YEARLY TIMEFRAME:

A bearish engulfing candle has formed, so far, this year on the yearly chart, and it has a range of 1,234.49 points...the second largest on record, after the 2020 range. It closed at a new low in 2022 and well below its yearly pivot point of 3996.12.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen below both 5 and 20-year MAs...depicting extreme bearishness on this timeframe.

SPX Yearly Chart

QUARTERLY TIMEFRAME:

Note the long upper spike on the Q3 candle, where it faked a bullish reversal, before falling to a new quarterly low close for 2022...and well below its quarterly pivot point of 3831.68.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen well below both 5 and 20-quarter MAs (which are about to form another bearish crossover)...depicting extreme bearishness on this timeframe.

SPX Quarterly Chart

MONTHLY TIMEFRAME:

Note the long upper spike on the September candle, where it faked a bullish reversal, before plunging and closing at a new low for 2022...and well below its monthly pivot point of 3763.01.

The SPX:VIX ratio, shown at the bottom of the chart in histogram form, is sitting just above an important major support level of 100.00, and has fallen well below both 5 and 20-monthly MAs (which formed another bearish crossover in April)...depicting extreme bearishness on this timeframe.

SPX Monthly Chart

PIVOT POINTS FOR OCTOBER:

The following Pivot Point Calculator depicts the Pivot Point, 3 Resistance Levels, and 3 Support Levels for the month of October (taken from the data of the September candle)...which are possible upside and downside targets.

Note that the S2 target is in line with the first major support level of 3200, mentioned in my post of September 30, while S3 sits just above the next major support level of 2800, also mentioned therein.

CONCLUSIONS:

  1. As I mentioned in my post of September 30, until we see the SPX:VIX ratio fall to somewhere around 80.00, or more likely 60.00, I don't think we're close to an equity capitulation, yet.
  2. Furthermore, and, as I concluded in my post of September 24, all in all, I see no pivot away from U.S. Dollar strength and global equity and sector (and Bitcoin) weakness...YET.
  3. So, for the moment, U.S. cash is king, as the U.S. Fed has signalled its intent to continue raising interest rates and keep them elevated for some time after inflation has declined to the Fed's 2% maximum inflation target...which could last well into 2025.
  4. As an aside, my 2021 Market Wrap-Up and 2022 Forecast (written on January 1) has been fairly accurate, to date. By the way, the S2 target for the 2022 timeframe (calculated from the 2021 candle) is close to 3200 (and the Pivot Point from the 2020 candle sits at 3236.04), while the S3 target is close to 2800...both of which are likely targets, either for October, or sometime this year...especially 3200, where there is a confluence of a variety of Pivot Point targets, as well as (first) major price support. Here are several excerpts from that post, as well as my last update therein...



Finally, until President Biden drastically changes course from his 'Big Government Tax & Spend' agenda, and unleashes the oil and gas industry by dropping his overly-restrictive and punitive regulations, trade with caution, as I expect high volatility and large intraday swings to continue!

* UPDATE Oct. 10...

If JP Morgan CEO Jamie Dimon's projection is correct, a further 20% drop on the SPX (from 3600) would send it down to around 2880...and in line with the S3 target mentioned above...or 2800 on a downside overshoot.

While it may not hit that level this month, 2800 is a major price support level shown in my article of September 30...and a possible eventual target.

SPX Monthly (intraday price October 10)