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S&P 500 Bounces Off Support For the Third Time, What's Next?

The S&P 500 index rose 2.47 percent on Thursday amidst much relief and cheering from the bulls. The rally is barely noticeable on a weekly chart.
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S&P500 chart courtesy of StockCharts.com, annotations by Mish.

S&P500 chart courtesy of StockCharts.com, annotations by Mish.

Technical Rally

The stock markets rallied sharply on Thursday, smack in the face of a miserable GDP report.

The move was not at all surprising technically speaking. Stocks are more than a bit oversold and the bounce was off a level where stocks have rallied twice before. 

The problem for the bulls is that each bounce off a technical support level gets weaker and weaker. 

Looking Ahead

The 4100 level support may not survive another test. And the next level of support is somewhere in the 3700 to 3900 level area. There is no technical or fundamental reason to expect that level to hold either. 

S&P 500 Monthly Chart

S&P500 chart courtesy of StockCharts.com, annotations by Mish.

S&P500 chart courtesy of StockCharts.com, annotations by Mish.

I keep returning to the above chart and see the same thing: A Fed QE induced speculative bubble that's the biggest on record. 

It's possible for any level to hold, even a non-support level, but 3200 is at best not all that likely. Not even 2400 represents a good bargain and that would be a 50 percent decline from the top.

Poking Fun of the Day

Many people follow Cramer just to do the opposite.

ARKK

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ARKK chart courtesy of StockCharts.com, annotations by Mish.

ARKK chart courtesy of StockCharts.com, annotations by Mish.

ARKK, Cathie Wood's ARK innovation ETF failed to rally at all on Thursday. Technically speaking it seems to have a date with 40 then 32.5. 

 A complete round trip from 27 to 159 and back looks increasingly likely.

TDOC Weekly Chart 

ARKK chart courtesy of StockCharts.com, annotations by Mish.

ARKK chart courtesy of StockCharts.com, annotations by Mish.

TDOC bounced hard off support at 27. Unfortunately, it fell from 300 to 27 along the way. 

ARKK is full of garbage like that, which explains why ARKK is down 69 percent from the high and still falling fast.

I keep repeating that people have no idea what carnage is coming. ARKK typifies the bubble.

This post originated at MishTalk.Com.

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