There has been some force in the last couple of sessions that will help assess if the Bulls still have some power left on them. If the S&P can hold and rally from its current level of 4,515 then the Correction might be over. If the selling pressure returns and takes the S&P back to 4,400 or below that level, then we will still need to wait and see what direction the Market might eventually take.
Reviewing the daily chart below of the last 9 months of the S&P 500, we can see that the Correction (at least up until now), reached a similar level than in Oct/2021 (orange arrows). The last two bars of the daily chart are tall and both closing at the highs of the session, different from the days before those two bars, where the S&P tried to rally and couldn't hold the gains to the end of the session.
From my point of view, the 4,500 level will present a psychological barrier where the S&P could get stuck or decline unless it has real force to break that barrier. We will have the answer tomorrow, if there is force the S&P will continue above 4,500 and rally from there. If the force is over, maybe it will stay around 4,500 moving sideways. If the selling pressure is back and as strong as before, then eventually the Market could be back at 4,400 or below.
Another encouraging measure that I discussed in my last Weekend Market Overview post, is that the New Highs and New Lows number would reflect the force of Bulls and Bears. Today the numbers for the New Highs didn't really increased much in any timeframe, but the numbers of New Lows in all the timeframes dramatically decreased.
I haven't opened any new position yet, I'm waiting for more evidence that this could be a strong rally, not just the S&P testing the 4,500 level. If your strategy is about catching the bottom of the Correction, it's a risky one, hopefully you have a good plan about what to do if the selling pressure resumes the Correction. The way I trade, I don't need to catch the bottom of the Correction, not even the beginning of the rally, I still have time to wait for a good setup in case this rally continues.
