The drop from consolidation that started in December led to the S&P 500 retracing over 50% of the move higher from the 2016 low to the September 2018 high. This fueled the crash talking recession craving news media. We may still see a crash and or a recession, but it is not here today.
In fact, since the Christmas Eve bottom the S&P 500 has done nothing but correct this correction. Looking at the chart below of the S&P 500 ETF shows the price still short of the break down level from December 14th, when it fell through support. But it also shows 2 strong moves to the upside followed by short term consolidation.
A third leg higher would complete a 3 Drives pattern. And as projected it would target a move to the 200 day SMA. If this happens will it reverse? No one knows. It would be firmly over the prior support. And with the RSI on the edge of the bullish zone and the MACD about to move to positive, it would have the backing from momentum to continue higher. A battle over direction is the only certainty that one can conclude.
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