S&P 500 enters short-term consolidation phase
The short-term technical outlook for the S&P 500 has shifted to a neutral bias due to a loss of upward momentum, though the long-term uptrend remains intact.
The argument
The guest argued that the rolling over of the 20-day moving average and a short-term overbought sell signal from the stochastic oscillator indicate a consolidation phase. However, she noted that intermediate and long-term indicators do not yet show confirmed sell signals, suggesting a period of digestion rather than a major bearish reversal.
The thesis, stress-tested
✓ What validates it
- ✓S&P 500 breaking out of the boundaries of its current consolidation pattern
- ✓Stochastic oscillator hooking back up from neutral territory (a 'stochastic pop')
▸ Risks discussed
- ▸A decisive breach of the 50-day moving average would worsen the intermediate-term outlook
- ▸Whipsaw signals can occur, as seen with the false MACD sell signal in March
Hear it yourself
"But to address that signal in particular, what we were looking at was the monthly MACD indicator for the S and P 500, which did confirm or actually log a sell signal or bearish crossover in March."
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