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Lawrence G. McMillan

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Jan. 20, 2022, 11:22 a.m. EST

This is the next big test for the S&P 500 as a number of indicators flash ‘oversold’

By Lawrence G. McMillan

The S&P 500 index has continued to fall this week and is now nearing the lower end of the trading range (4500 – 4700+).

An S&P /zigman2/quotes/210599714/realtime SPX -4.04% close below 4500 would be bearish in that it would be a violation of the lower end of that range. In addition, it would be a breakdown below the December lows – often a very bearish sign, and sometimes the beginning of a bear market. So expect the bulls to strongly try to hold this 4500 support level.

On a potentially more positive note: a number of our indicators are getting oversold and thus would eventually roll over to buy signals. For example, SPX is just a tiny bit above the –4σ “modified Bollinger Band” (mBB) at the current time. If it closes below that Band, it would set up an eventual McMillan Volatility Band (MVB) buy signal. There is no guarantee that will occur, though.

/zigman2/quotes/210599714/realtime
US : S&P US
3,923.68
-165.17 -4.04%
Volume: 2.71B
May 18, 2022 4:56p
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