Piercing Pattern
The stock market gapped down to start the week, but saw strong buying during trading hours.
This gave us a piercing pattern, which can be powerful.
Piercing patterns occur when you gap down on the market and then see buying all day, with a close piercing the previous bearish bar.
This is exactly what we have in the S&P 500.
Does it mean we have a bottom in? No.
However, it is a start. And itβs something to keep an eye on as we move forward in the trading week.
Bullish Divergence
Another sign that I saw intraday was that we are developing a bullish divergence if you examine RSI on a 4-hour chart.
Itβs very clear on both the Nasdaq and the S&P 500:
Again, this does not mean the bottom is in.
But, if you compare it with the bottom that we found in 2022, it looks awfully similar. Take a look back at how RSI marked the bottom of the market in 2022:
The market is giving us technical indicators that we canβt ignore. Watch this video for a much deeper breakdown of the technicals: