SPX closes above its opening price after recovering from early selling pressure
S&P 500 Index (SPX) Technical Analysis Report for Oct 23, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, SPX finished the week -0.53% lower at 3465.39 after gaining $11.90 (0.34%) today. Trading up to $24.45 lower after the open, the S&P managed to reverse during the session as bulls took control ending the day above its opening price. Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (SPX as at Oct 23, 2020):
Friday's trading range has been $26.01 (0.75%), that's below the last trading month's daily average range of $41.90. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SPX.
Four candlestick patterns are matching today's price action, the Dragonfly Doji which is known as bullish pattern, two bearish patterns, the Hanging Man and the Northern Doji and one neutral pattern, the Doji. The last time a Dragonfly Doji showed up on July 31st, SPX gained 0.72% on the following trading day.
The market ran into sellers again today around 3466.46 for the third trading day in a row after having found sellers at 3460.53 in the prior session and at 3464.86 two days ago.
Although the index is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the close-by swing high at 3515.76 where further buy stops might get triggered. Selling could accelerate should prices move below the nearby swing low at 3415.34 where further sell stops might get activated.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous two Highs" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for S&P 500. Out of 123 times, SPX closed higher 60.16% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 68.29% with an average market move of 0.62%.
With five out of the other six Major World Indices closing higher today, the ones that stand out on the positive side are FTSE gaining 1.29% and DAX closing 0.82% higher. On the flipside the worst performer has been DJIA closing -0.1% lower. Read more