In this article we investigate whether the 5% gain in S&P 500 on December 26, 2018, is a true or false signal of a bottom. For the purpose of this analysis we use a relatively simple but powerful indicator.
A false signal of a bottom, such as the one that occurred in March 2008, can be devastating, as shown in the S&P 500 chart below:
On March 18, 2018, the index gained 4.2% and some thought that was the bottom of a correction. But the correction resumed after about two months and became bear market.
Yesterday the S&P 500 gained 5% after dropping nearly 20% from its 52-week highs. Is this a signal of a bottom? Below is our analysis based on our unique indicator.
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Disclaimer: No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.
Charting program: Amibroker
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