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Is the bottom in play? Time to buy the S&P 500 after a 10% decline? Important short-term test seems to be in play today!
The S&P 500 remains inside of rising channel (A) over the past 6-years. It hit the top of the channel a couple of weeks ago at (1), as momentum was the highest in decades.
The natural backing off from lofty momentum now has the S&P testing 2-year rising support at (2). The 10% decline over a couple of weeks has rarely happened in the past 100-years. Even though the decline has been big and surprised several people, momentum is yet to reach levels where the S&P 500 bottomed in 2011 and 2016.
If support would fail to hold at (2), 6-year rising support would come into play in the 2,375 zone. In time if this support level would happen to come into play, odds are decent that momentum would have had the chance to reach oversold levels.
