Does History Repeat Itself? 2018 S&P500 and 2020 Nasdaq Fractals

26 thg 10, 2020

In this post, I will take a purely technical approach to the Nasdaq's weekly chart, using fractals from the S&P500's 2018 price movement.


2018, S&P 500
- On the left side, we can see the weekly chart for the S&P500 Index (SPX)
- The index was at an uptrend, moving above the Ichimoku cloud
- Due to fear, uncertainty, and doubt in the global economy, a flash crash was triggered
- The index tested the 200 Simple Moving Average (SMA), and bounced right back up, forming a V shape recovery
- At the bottom, the Relative Strength Index (RSI) was also at oversold territories
- During the quick recovery, the Moving Average Convergence Divergence (MACD) formed a golden cross, confirming the uptrend
- Prices seemed to have topped out once again, after forming a double top
- While the MACD was showing convergence, the bearish histograms were not big enough to provide confirmation for a potential trend reversal
- Eventually, prices broke through resistance, and continued to rally upwards

2020, Nasdaq Index
- On the right side, we can see the weekly chart for the Nasdaq Index (IXIC)
- The overall setup is very similar to that of SPX in 2018, including the Ichimoku clouds
- The index bounced on the 200 SMA
- While it bottomed out temporarily, the RSI reached oversold territories
- Just like the S&P, the MACD provided a lagging confirmation
- The current death crosses that have taken place did not demonstrate significant bearish momentum
- The bearish histograms are extremely small, and the death crosses almost immediately get negated
- We are currently seeing a double top form on IXIC's weekly
- If this fractal turns out to be correct, this would be a phase of consolidation before breaking out to rally further

Reminder
- The stock market is not driven by technical factors. This is merely an analysis taking a technical approach to interpreting the current price action on IXIC's weekly chart
- The stock market is unaffected by certain technical indicators. Divergences and golden and death crosses of oscillators get easily negated
- It's important to note that for both market situations, the drop was caused by external factors - fear, uncertainty, and doubt induced by external factors
- The fundamentals of the companies that constitute the index did not change much

- For more information on the fundamental aspects, check out my other analysis on Nasdaq's breakout

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