S&P 500 Technical analysis.

S&P 500

https://rb.gy/flcceo

I was asked about the types of technical analysis that I used.  Thus, I would like to give my opinion about technical analysis.

I am a fundamental analyst more than a technical analyst because I've more faith in the fundamental analysis due to my life experiences.

Let me begin the journey with LTCM.

https://en.wikipedia.org/wiki/Long-Term_Capital_Management

Basically, LTCM was a quantitative fund management firm which was managed by 2 economics Nobel prize laureates and many PHDs in mathematics and computing, and also top technical analysts.  The failure of LTCM had shown that technical analysis per se didn't work.

Furthermore, there is not a billionaire now who uses technical analysis.  The only billionaire is Warren Buffett who uses fundamental analysis per se and he doesn't believe in technical analysis.

Since I am neither a Nobel laureate nor a PHD in maths or computing, I will stick to do what I do best which is fundamental analysis.

Nevertheless, I will still give my technical analysis for S&P.  Technical analysis is something subjective and different people will interpret it differently because different people have different time horizons in investments.

I am a swing or position trader technically instead of a day trader.  For explanation purpose, I will use publicly available charting tools to illustrate my technical analysis.

I've drawn 2 lines on the chart.  The recent 2 high points line will be the resistance level and the 2 low points line will be the support line.  Furthermore, I've added Bollinger bands (2 Std Dev, 95% inclusion), 60-day Simple Moving Average (SMA), 100-day SMA, RSI and Stochastics to the chart.

From the chart, it looks like the S&P is at a pivoting point whereby it will either rebound or continue its downtrend.  If the S&P breaches the 100-day SMA or my support level (also near 100-day SMA), it will continue to fall further.  However, if the S&P closes above my resistance level and/or climbs above the 60-day SMA, then the S&P will continue its recovery.  As for the RSI, the recovery will take place after it crosses the 50 level mark on the chart.  The stochastics are in oversold territory but are stagnant now.  Thus, a stochastics upward crossover will signal a recovery in the S&P.

In conclusion, I will adopt a wait-and-see position for the technical signals to be clearer first.

The technical indicators that I commonly used for my investment time horizon:

5-day SMA

10-day SMA

20-day SMA

60-day SMA

Bollinger bands (2 std dev)

Self-drawn technical lines (resistance and support lines)

Relative Strength Index (RSI)

Momentum indicator (Stochastics or DMI)

Last but not least, I use candlesticks just to determine their high-low points and also to check for any candlestick's gap.  I don't interpret the candlesticks' patterns (doji, hammer, etc) because they were invented based on perishable commodities.