{"id":21655,"date":"2024-03-15T07:30:22","date_gmt":"2024-03-15T11:30:22","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21655"},"modified":"2024-03-15T07:30:22","modified_gmt":"2024-03-15T11:30:22","slug":"something-must-give","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/something-must-give\/","title":{"rendered":"Something Must Give\u2026"},"content":{"rendered":"

Stocks have certainly outperformed this year…<\/p>\n

The historical annualized average return of the S&P 500 is around 10.26%.<\/p>\n

Right now, we’re closing in on being up 10% year to date. And it’s only the middle of March.<\/p>\n

There’s a lot of trading to go before we close the books on 2024…<\/p>\n

And while it’s certainly possible that stocks keep going up, it’s far more likely that we’ve already seen the majority of the gains for this year.<\/p>\n

The S&P 500’s price chart (SPX) holds an important clue that savvy traders should be watching like a hawk.<\/p>\n

SPX has been trading within a narrowing wedge pattern since December 28.<\/p>\n

And as we’ve already mentioned, that pattern has guided stocks higher by nearly 10%.<\/p>\n

But now the market is reaching an inflection point.<\/p>\n

A Vicious Sell-Off or an Incredible Melt-Up<\/h2>\n

The pattern is very close to running its course. What happens next could set the tone for the remainder of the year.<\/p>\n

We’re either going to get a vicious sell-off or an incredible melt-up.<\/p>\n

Let’s check out the chart below so you can see the reasoning behind my analysis.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

There are two important things going on with this chart.<\/p>\n

First, we have the ascending wedge pattern drawn using the red trendlines.<\/p>\n

This pattern is close to completion because prices are nearing the point where the two trendlines will cross.<\/p>\n

If prices reach this point, the pattern can’t continue developing, and the market must either break up or down.<\/p>\n

Ascending wedges are reversal patterns. If this particular wedge in SPX is for real, we should see the market break hard below its lower trendline any day now.<\/p>\n

<\/p>\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<\/p><\/div>\n<\/div>\n

<\/p>\n

A Scary Signal<\/h2>\n

This brings us to the second important feature of the chart, the Relative Strength Index (RSI).<\/p>\n

The RSI is a momentum indicator, and right now, the RSI is flashing a scary signal called bearish divergence.<\/p>\n

Notice how the RSI has been making a series of progressively lower peaks (blue arrow) even as actual prices have been making higher peaks.<\/p>\n

This is what’s known as bearish divergence.<\/p>\n

Bearish divergence is a leading indicator. That means you’ll see bearish divergence pop up on a price chart before the market starts to trade lower.<\/p>\n

The limitation of bearish divergence is that it doesn’t tell us when<\/em> the market is going to reverse.<\/p>\n

That’s why we have to combine the chart pattern with the momentum indicator.<\/p>\n

If we get a strong break below the wedge’s supporting trendline, that’s a good initial sign that this stage of the market rally may be ending.<\/p>\n

On the other hand, if prices break strongly through the upper trendline, we can still expect further upside.<\/p>\n

Happy trading,<\/p>\n

\"Signature\"<\/p>\n

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

Likely, we\u2019ve already seen the majority of the gains for this year. <\/p>\n","protected":false},"author":55,"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-21655","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\/21655","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\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21655"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21655\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21655"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21655"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21655"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21655"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21655"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21655"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21655"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}