To The Moon

Feels like wild moves on the stock market? Correct!

Said by ThinkMarkets analyst Carl Capolingua，Last 3 sessions = never happened before!

• Yes, we've seen the $S&P 500(.SPX)$ posted its biggest intraday gain since the 2020 turmoil that saw the index near its March 2020 lows on last thursday.
• Then On Friday, the index gave up much of its gains.
• On monday session,The major index closed up again, with technology stocks in particular gaining the most.$DJIA(.DJI)$ ,$NASDAQ(.IXIC)$

Why did it bounce back last night? Has it been a stage bottom recently?

Let's take a look at the relationship between the US dollar index, VIX and Indexes, as well as the need for technical patterns.

1. Monday US Dollar Index Fell

The trend of the strong dollar this year has been negatively correlated with the trend of US stocks.

In the past two days, the US dollar index fell from above 113 to 112 area. Mainly because the British government has actively dealt with the pension crisis and tax cuts since last weekend, and is preparing to issue a statement on the medium-term fiscal plan in advance, which has helped the pound rebound and then weighed on the dollar. It remains to be seen how effective the UK policies are.

Regarding the future expectations of the US dollar index, the repricing based on the Fed’s rate hike expectations, and the growing concern about a hard landing of the global economy, according to the Fed’s current forecast, as the risk aversion mood further intensifies, the US dollar index still has about 5% on the existing basis. % upside.

If the negative correlation continues to be valid, then U.S. stocks will definitely fall. The next rate hike decision time is November 2.

2. Monday VIX Continued to Fall

On last Friday, the $Cboe Volatility Index (VIX) $ closed at 33.87, lower than Thursday's 34.57, which also did not exceed the key point of 35 .

This Monday, the VIX closed at 31.37.

Cited from TheStockChartGuy,

The $VIX was retesting above 34 & losing steam. There is a MASSIVE GAP that needs to be filled down into the 21 area, Probably the most unobstructed run on the VIX we've had all year. When she($Cboe Volatility Index(VIX)$ ) falls.... She will fall HARD! And Mostly, when VIX fall, the market tends rally.

3、A Technical Rebound Happened:

Friends who knows how to read Weekly MACD and  monthly MACD have find that the key indices have gained technical support in recent area.In particular, we also saw that Thursday's bottom volume was very large, perhaps signaling a staged bottom.

Then, where is the short-term rebound target?

Some friends who especially like to study technical analysis pointed out: $S&P 500(.SPX)$ just come to a critical period, $SPDR S&P 500 ETF Trust(SPY)$ may be rising in an N-shape, and the first target for the rebound is 378 point, and then it need retraces. The defensive support level should be at 364 points.

Regarding $NASDAQ(.IXIC)$ , $Invesco QQQ Trust(QQQ)$ , $DJIA(.DJI)$ and other important indices, technical analysis shows that on the 1.5th day after bottoming out last thursday, indexes climbed over The hump station reached the middle rail of the Bollinger Line and entered the upper channel.Once entered the upper channel, no longer consider shorting within the day, with movement energy of the upper track continue. In the upper track, it will have a higher chance for you to take advantage of the trend and go long.

The time is ripe for a short-term rally in U.S. stocks without a drop in earnings or an official recession, said Michael J. Wilson, a longtime bearish U.S. stock market analyst at Morgan Stanley.

The $S&P 500(.SPX)$ , already down 25% this year, is testing a "significant support bottom" at the 200-week moving average, the S&P 500 may rising to about 4,150, which would represent a 16% gain from its most recent closing level.

Question for you:

How do you think the market will perform the following days?

Option 1.The major market index will fell again afterthen

Option 2. The market tend to show a decent rebound before next FED decision date