$SPX overbought, nobody is buying this
We saw a sharp recovery on
SPX
almost to the 618 fibonacci level but the underlying situation is still bad in the economy. People are afraid to buy back in at these levels knowing there are many problems in the economy still with coronavirus still running rampant. This lends to the many types of bear structures that easily play out from here: rounded top, head and shoulders, ascending wedge breakdown, etc. We can also see trading volume is going down recently which indicates investors are getting scared to buy at these levels. Also it being Friday traders are closing positions for the week which will lead to a bearish daily close thus fueling the bigger bear structure. The short target should be around the 382 fibonacci level at 2650 which creates a more healthy long term recovery.
There is only one scenario which doesn't end up in a bear trend and I believe this to be very unlikely: upward channel continuation in which we've seen a bounce from the channel bottom recently. We will know this is the case if we have a price above 2840. The more V shaped this recovery looks though, the more investors will call bullshit on it.
SPX
almost to the 618 fibonacci level but the underlying situation is still bad in the economy. People are afraid to buy back in at these levels knowing there are many problems in the economy still with coronavirus still running rampant. This lends to the many types of bear structures that easily play out from here: rounded top, head and shoulders, ascending wedge breakdown, etc. We can also see trading volume is going down recently which indicates investors are getting scared to buy at these levels. Also it being Friday traders are closing positions for the week which will lead to a bearish daily close thus fueling the bigger bear structure. The short target should be around the 382 fibonacci level at 2650 which creates a more healthy long term recovery. There is only one scenario which doesn't end up in a bear trend and I believe this to be very unlikely: upward channel continuation in which we've seen a bounce from the channel bottom recently. We will know this is the case if we have a price above 2840. The more V shaped this recovery looks though, the more investors will call bullshit on it.
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Update: 2820 is the absolute minimum bar for any sort of bullish indication (I'd like to see 2840 or higher ideally), below that the daily candle is bear, the weekly candle is bear, head and shoulders in play and rejection at descending trendline.
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