The stock market has been on a roller-coaster ride lately, however some analysts are speculating that a countertrend rally may be on the horizon. In particular, the Standard & Poor’s 500 (SPX) has been rising steadily and may reach a new record high before the end of the year.
To gain more insight into the potential rally, financial analysts are taking a closer look at the charts to see what they can uncover. Recent charts suggest that the SPX is entering a period of low volatility. This indicates that although the overall trend may not have fully reversed, there could be enough strength in the market to overcome current resistance and lead to a move higher.
Additionally, the charts suggest that the SPX may have built up enough momentum for a breakout from the current range that has been in place for over six months. A similar breakout occurred in October 2018, and that rally went on to reach all-time highs of 2,950. If the SPX can move above its previous highs, it could be a strong sign of a countertrend rally.
Finally, the charts also suggest that the SPX may have enough support from institutional investors to continue the rally. Institutional investors such as mutual funds and hedge funds are often seen as leading indicators in the stock market, and the recent buying activity in the SPX indicates strong support for a rally.
At this point, it remains to be seen whether a countertrend rally will occur in the SPX. While the charts suggest a strong possibility, only time will tell if short-term rallies will lead to a new record high, or if the market will continue to remain range-bound. Either way, financial analysts will continue to monitor the charts for further insight into the potential for a countertrend rally in the SPX.