Trend Check with Tushar Chande

SPX Sets Up Shallow Down-trend Channel: Heading Towards Retest of Recent Lows?

by Tushar Chande

The S&P 500 Index has set up a shallow down-trend channel, possibly setting up a retest of the recent lows.  Three days in a row, the market has closed below the open, and the past four days show relatively long upper shadows on candlestick charts denoting overhead resistance.  Besides, the $VIX index remains above 17, and the market thus remains unsettled, primarily due to the bond market, which is testing critical support.   Chart 1: The $SPX has set up a shallow down-trend channel over the past few sessions. Note how the Chande Trend Meter has fallen below 20 Read More 

Trend Check with Tushar Chande

A Model For S&P 500 Bottoms (Are We There Yet?)

by Tushar Chande

Here I explore recent key lows and bottoming patterns in the S&P 500 in order to understand how they may apply to the current market decline. Naturally, the past may give us clues, but there is always uncertainty about how the bottom will form this time.  For obvious reasons, I will ignore "V" bottoms, that often form during up-trends, since they require no further elaboration.   Chart 1: A template for S&P 500 Double Bottoms. The initial low is followed by a rebound into the Fibonacci retracement zone.  A relatively rapid 8-10 day decline is a firm test of the Read More 

Trend Check with Tushar Chande

If You Only Learn One Lesson From This Sell-off (Learn This One)

by Tushar Chande

The recent sell-off in the market is among the worst 10 sell-offs since 2010 (see Chart 1), which means a rebound cannot be too far away. The all-important gauge of market skittishness, the $VIX, has not exceeded the level of 50 identified as the peak in my previous post, and has now closed below the five previous closes, implying that the most intense selling panic is probably over (see Chart 2).  The bottoming process is not complete, and may take various forms, and depends on  whether we get a "V" bottom or a re-test of the lows over the next 1-4 weeks (as in 2015-16) or Read More 

Trend Check with Tushar Chande

$SPX Forms Key Bottom Near 2600 (As Expected)

by Tushar Chande

In my post on Jan 27 I wrote about the $SPX that a "a drop to 2600 is not impossible" and showed a 50% retracement level at 2598.50.  Today, the market bottomed at 2593.07 within a whisker of my forecast.  The blow up in the $VIX index suggests a tradable bottom has formed, though we will need several days of backing and filling, and even a retest of the low.  Wall Street conventional wisdom gurus have also called this a bottom, so we can expect a bottom building process to commence at these levels.   Chart 1: The $SPX found Read More 

Trend Check with Tushar Chande

Markets Fall Out of Parabolic Patterns After Well-timed Warning

by Tushar Chande

After my well-timed warning last weekend, the markets fell out of their parabolic patterns on Monday, responding to the external trigger of rising rates.  For example, the New York Composite was the first to fall out of the pattern and fell decisively all week (see Chart 1).  The external trigger was the rise in rates (see Chart 2).   I had discussed the risk of  rising bond yields in a earlier post on January, 11.   The stock market conveniently reversed after reaching the upside Dow target range that I identified two weeks ago (see Chart Read More