SPY: Low at $364 (technical analysis) (NYSEARCA: SPY)

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Technicians revisit the previous market (NYSEARCA: SPY) bottoms just as divers visit ships that have sunk long ago. The SPY’s first estimate for a bearish low was $364. It seemed like a good guess, because the SPY bounced up to $428. Now it doesn’t look so good anymore, and the SPY is looking for a new bottom.

The background is here

We know the bottom is probably indicated on the chart below, but the market needs to tell us exactly where the bottom is. It will not be a secret to technicians who have studied previous bottoms. We will be able to identify the bottom for you when it appears on the chart. There are definite background patterns that can be seen on a chart. It doesn’t matter if it’s a 5 minute chart, daily chart or weekly chart, the bottom patterns are identifiable, contrary to the popular Wall St. myth that says you can’t identify funds. We have always indicated here that at $428 there is no floor in place and that $364 needs to be reviewed.

Identify the background

Why can’t we identify it now? We cannot predict the future. We don’t know when the Fed will stop raising rates. When it stops, we will probably be close to seeing a bottom. We cannot determine when the war will end. When it ends, the SPY will be close to a bottom.

We don’t know if COVID is over. Do we have another mutation? Is COVID joining the annual flu shots we might take in the future? Look at the recent lockdowns in China.

We don’t know if it will be a soft landing or a hard landing. We believe that 2023 is a very difficult year and 2024, a presidential year, will see an improvement. No one wants a hard landing and a professor is already warning the Fed for overdoing the “pain” in 2023. The swing of the pendulum that overdone the stimulus is about to overdo the economy’s pain, as the pendulum swings back.

We don’t know how much analysts and CEOs will cut earnings forecasts. We know that when this happens it will not help the stock market. Inflated costs can increase much faster than the ability to raise prices, thus reducing margins. FedEx (FDX) just announced that it is cutting costs as its revenue declines. This will be heard over and over again with other companies as the Fed created a recession in the country in order to reduce inflation to 2.2%.

Identify opportunities

We know that the bear market continues and is looking for a bottom. We can make money knowing this, not knowing exactly where the bottom is. When we see that the bottom is in place, we can go back from a short position in the SPY to a long position in the market.

We know that some stocks have already hit rock bottom. They have little downside risk left. They will advance ahead of this bear market and lead the bull market rebound from the final low of this bear. We have daily reports identifying these stocks.

We know that even in a bear market, there are bullish stocks. These are easy to identify and earn money. We offer a daily list of these actions that we publish to our subscribers, as well as our daily SPY article.

We know the war will eventually end. We know the Fed will eventually stop raising rates. We know that this bear market will bottom out and a new bull market will begin. We know stocks that will bottom early and start bullish moves before the market. It’s time to accumulate cash for these investment opportunities. Right now, cash is king.

Where is this market going next?

On the chart below, you will see the formation of the next low, just as you saw the formation of the premature market estimate of the low at $364. You can see that the next targeted support level is $344. Will it descend directly to this level? Of course not, we will see technical rebounds. But this column of falling “O”s can continue down to $344, as you can see from previous declines below an existing bottom.

Target the next support at $344

SPY tests bottom at $364 (StockCharts.com)

REMARK: We have circled the five red “O”s identifying the broken price levels this week, taking us so suddenly to the low at $364. This tells us that the market is down. We have circled the next targeted support level at $344.

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