S&P500. Deep Technical Analysis, Mixed Messages + 3 Outcomes

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When analysing daily chart price moves to determine the future direction of a market, it is important to use a good mix of indicators each focused on a telling a different story.

In this analysis I will be using a few of my favourite indicators:
1. Price – the most important indicator of all
2. Volume – the power behind the price trend
3. RSI – Price Strength Indicator
4. Money Flow - A Price & Volume Indicator
5. On Balance Volume – A Price & Volume Indicator

By having a mix of price and price volume indicators we can see is the indicators agree with price (confirm) or they contradict the price direction (Divergence).

Analysing Price & Volume

Price Down–Volume Up (PDVU)
In an uptrend this may indicate a crisis, panic selling or simply when a stock is going out of favor. The pressure is on the sell side and to sell they have to accept lower prices. A strong negative signal!
Price Up-Volume Down (PUVD)
In an uptrend this is very bearish as it suggests that although prices are rising, there are fewer participants suggesting people are backing away from the higher prices. This also infers that the trend is weakening. In a downtrend it suggests a continuation of the downtrend.
Indicator Analysis
• Relative Strength Index – Confirms the current short-term uptrend in price
• Money Flow – Confirms the current short-term uptrend in price
• On Balance Volume – Flat Not Confirming Uptrend

Conclusion & Outcomes

We are seeing mixed technical analysis messages here. Volume says down, RSI & oney Flow say up, OBV is not indicative.
So, what can we hypothesise as the outcome? Well there are 3 possibilities.
1. Price Moves Down from Here (2,800) to the Current Crash Low of 2,00 points
2. Price Moves up to psychological level 3,000 and then collapses to 2,000 points
3. Price Moves Up to challenge previous highs.

What possibility do I bet on?

I think 2 is most likely, followed by 1, then 3.

Why, because I believe that the full economic devastation wrought by the virus has not yet revealed itself.
The USA is very badly impacted, and this index measures the core base of American Wealth Creating Companies.

My heart goes out to our American friends who are impacted by the 2,000 deaths per day.

Barry