The counter rally in the market could be over, S&P 500 broke down from a bearish flag formation
The counter rally in the market could be over, S&P 500 broke down from a bearish flag formation
S&P 500 is in a downtrend, on 5/20/22 the S&P 500 hit an intraday low of 3810 and the broader market has seen a counter rally.
From 5/27/22 to 6/8/22 the S&P 500 traded in range of 4074 on the low end, and 4177 on the higher end. On June 9, on a day where the S&P had a high day range, the S&P 500 closed at 4017. This close is noticeably lower than the range, and given the downtrend the market has been in, we view this as a bearish indicator.
We think this flag formation has signaled further downside in the S&P 500, and a revisit of the 5/20/22 low of around 3810 is in store.
Our models suggest that 3810 will not be a level of support and the downturn will lead the S&P 500 to trade down to around 3700 in the S&P 500.
