{"id":19852,"date":"2022-06-29T07:30:05","date_gmt":"2022-06-29T11:30:05","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19852"},"modified":"2022-06-29T07:30:05","modified_gmt":"2022-06-29T11:30:05","slug":"the-market-must-overcome-these-two-obstacles-for-a-rally","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/the-market-must-overcome-these-two-obstacles-for-a-rally\/","title":{"rendered":"The Market Must Overcome These Two Obstacles for a Rally"},"content":{"rendered":"

On June 15<\/a>, I wrote that the S&P 500 (SPX) was trading within a descending channel.<\/p>\n

It’s a reversal pattern which temporarily contains price action within the boundaries of two parallel trend lines (blue lines on the chart below).<\/p>\n

Eventually, prices will break out of the channel.<\/p>\n

This will be the first sign that the market has put in a strong enough bottom from which it can sustain a rally.<\/p>\n

On June 15, I wrote we should expect the SPX to find support along the lower boundary line of the channel.<\/p>\n

This support level came in around 3674 in the index.<\/p>\n

The very next day, the market pushed lower to test this trend line.<\/p>\n

The trend line worked exactly as it should have, and the market went on to rally almost 7% over the next five trading days.<\/p>\n

While this seems like a promising development, I don’t think this market is out of the woods yet.<\/p>\n

Let’s look at the updated SPX chart to see what I mean…<\/p>\n

\"Chart\"<\/div>\n

As you can see, the reaction off that bottom trend line is almost picture perfect.<\/p>\n

It’s encouraging, but there are two significant obstacles the market must overcome before I’ll be confident calling for a long-term bottom.<\/p>\n

The first obstacle is the upper line of this descending channel. Right now, it coincides with a price level of about 4020.<\/p>\n

The lower line of the channel was able to bounce prices quite strongly… telling me this channel is important to the market.<\/p>\n

Therefore, it’s possible this rally will sputter out as it encounters the upper line of the channel.<\/p>\n

But, if we can break out of the channel, then the market will have to clear the daily 50-period moving average (MA – red line).<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The 50-period MA is an important intermediate-term trend indicator.<\/p>\n

Notice how in April when the selloff picked up steam, the market broke below the 50-period MA and has stayed below it ever since.<\/p>\n

Getting back above the 50-period MA will be a strong statement by the bulls.<\/p>\n

They’ll practically be shouting from the rooftops that they’re ready to seize back control of this market.<\/p>\n

My long-term analysis of the SPX suggests the next bullish wave will carry us to approximately 5300 in the index.<\/p>\n

And will likely take place over a year or more once this technical bear market has ended.<\/p>\n

With that in mind, I’m more than willing to wait for the market to prove itself before getting aggressive on the long side again.<\/p>\n

Happy trading,<\/p>\n

Imre Gams
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

When do you think we\u2019ll be in a bullish market again?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The bulls will be shouting from the rooftops\u2026<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[76],"newsletter-type":[],"ticker":[],"class_list":["post-19852","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19852"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19852\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19852"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19852"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19852"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19852"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19852"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}