2022 Bear market bottom part 1
Hello Everyone, after a long hiatus, I am finally back, I will be posting more frequently, because the market is roaring back to life. ( and the technical evidence is stacking up deeper day by day ). Actually I was thinking of posting in July to document the bottoming ( base accumulation process ), however I just couldn’t find the time as I was too busy managing my trade position, watching market action and analyzing market amidst the fog of competing narratives.
<S&P 500>
On 12 August 2022, The 2022 bear market is officially over, because S&P 500 weekly close above 50% retracement ( 4210 ish level ) from 1H 2022 bear market peak to trough ( S&P 500 from 4818 to 3636), going back to all previous bear market history, no lower low has ever been made once weekly close above 50% retracement. ( I might do a historical bear market studies to illustrate this if time permit ). Currently as of Monday, SPX is at 4290ish level There are quite a number of resistance level up ahead, namely 200SMA, downtrend line, and 61.8% Fibonacci level, ( SPX is most likely to clear these resistance , either in 1 or 2 attempt ) beyond these resistance, 4400-4500 as represented in purple color box represent the next resistant zone, as there were a lot of buying&selling in those area.
<Nasdaq 100>
For Nasdaq 100 , chart evidence shows the bottom (11037 ) is in, even though it has not reached 50% retracement ( 13890 ish level ), but the down trend line has been broken and was close above convincingly. As long as it clears the 13550 level , it will go on to test the next set of support resistance ( 13896 to 14250 ), and 200SMA level.
This is the most hated rallies, because it seriously caught everyone off guard, majority of the market participants were expecting at least 1 more leg lower to reach the market bottom, which means there are a lot of short being closed out in the recent, and hedge funds have not deployed enough cash to accumulate stocks at the bottom. Evidence can be seen most glaringly in SPX , where accumulation and distribution is going higher ( meaning short covering ), but On balance volume is not going up by much ( lack of buying volume ).
On the other hand, risk-targeting funds has just started buying stocks again as volatility declines, ( typically they buy wen VIX goes back down to around 20 level, and start selling when volatility goes up ).
We are on the cusp of a revolution where beating smart money is a possible scenario ( return percentage , and market entry exit wise ). Because the information asymmetry is being reduced by the availability of better charting platform, fintwit, prevalence of quality financial education/blogger. During this bottoming process, some smart retail with better access of market info and firm grasp of market knowledge were able to outsmart the smart money ( hedge fund ), and risk targeting fund ( typically not as smart as hedge fund ), has been able to outsmart hedge funds.
Furthermore, I will also start a trade call service, starting with a USD10,000 account.
1st trade call, buy 1 lot of micro-Emini NQ at the previous weekly close
Rationale: close and broke above down trend line
Entry : 13550
Target : 15250
Stop loss : 12900 ( 20 SMA )
In the days ahead, I will write a series of articles to share the followings content,
1) to identify trend change and market entry technique to catch market bottom after signs of market trend change. ( lets face it, we are all busy with work, family life, and missing market entry happens very often, therefore having several market entry to participate in the market movement & capture the trend is a useful repertoire in any trader/investor toolkit )
2) Additional evidence of market bottom in mid June – July 2022.
Disclaimer : The information presented here are for research and education purpose only, and does not constitute investment advice, trading recommendation, author shall not liable for any action taken by any individual/company with regards to the information presented here or any part of the website - https://marketcycleedge.substack.com/