Today I’ll share exactly where I think the SPX (S&P 500) is going in October, including where I’m interested in shorting the market and key targets.
I’ll also provide an update on the US Dollar Index (DXY), a critical component in my the SPX scenario discussed below.
Watch the video below and scroll down for the annotated charts and analysis.
We’ve seen an incredibly aggressive rebound from the SPX following the liquidity sweep below the 4,190 key level.
You can see how there have been very few retracements during the current rally.
That’s both a sign of strength and cause for concern for bulls.
The lack of consolidation during the November uptrend means there are considerable pockets of liquidity sitting below current levels.
Areas like 4,330, 4,280, and even 4,200 are stacked with sell-side liquidity.
As I often mention on this website, liquidity pockets like the ones above often serve as magnets for price.
That doesn’t mean SPX has to revisit those regions immediately, as liquidity sweeps on the daily time frame can take weeks to play out.
However, the upcoming resistance between 4,400 and 4,420 might have something to say about that.
As described in the video above, the overall structure for SPX since the July top looks like a smaller scale to what we saw in 2022.
We have an established downtrend since July and a descending broadening wedge.
It’s nearly a mirror image of the 2022 downtrend only much smaller.
If it plays out similarly, we could see the next leg lower begin between 4,400 and 4,420.
But the DXY is going to play a critical role in this potential scenario.
Note that the dollar index broke the 105.60 level last week, a level we’ve discussed at length for months.
If the DXY can’t reclaim the 105.60 area this month, all bets are off for a significant correction from the SPX.
I can’t stress the above statement enough, as a weak dollar would only (likely) strengthen a market like the S&P 500.
As always, time will tell.
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