More red quarters in sight?

The graph below shows the trend of the Future ES (SP500) on a quarterly timeframe.

On the right, I plotted the retracements starting from the bullish impulse from the lows in the COVID phase to the highs at the end of 2021 / early 2022.

As you can see, the SP500 closes the third red quarter in a row, proposing a trend that has not been seen since the sub-prime financial crisis (2007/2008) and even earlier during the dot-com bubble at the turn of the year. 2000/2001.

During the two major crises, the index lost 58% and 51%, respectively.

The pattern formed in the quarter just ended is very similar to that of the 2008 collapse with a very bad and decisive bearish wick rejection in the third quarter, which does not promise anything positive for the next few months.

To date, the index has lost around 22% since the beginning of the year. The key level to monitor from today to the end of the year will be that of 3961, mid-point of the quarter just ended.

The reaction in this area will be decisive in making us understand what the fate of the market will be both for the end of this year and especially for 2023.

A holding of this level could change the trend and make us return with a reasonable probability even above 4300.

Conversely, a reversal could project prices towards the mid-point of the tracked impulse (3491).

Pay particular attention to this area! In the event of a failure to maintain the 3490 area, the risk would be that of seeing the index collapse and potentially extend to the lows of the COVID period (2174).

See you at the next update!