Summary
The stock market has come back to life after some scary moments last week. Over the past three days, the S&P 500 (SPX) has gained nearly 3%, while the Nasdaq and Nasdaq 100 (QQQ) have regained more than 3%. The SPX is up 3.6% from its intraday low last Friday, the Nasdaq is up 4.5% and the QQQ is up 4.2%. The SPX has quickly reclaimed its 50-day average, and the five-day/13-day exponential moving average (EMA) crossover is about to turn bullish. The five/13 day EMA has already turned bullish again on the Nasdaq and QQQ. All three indices have recovered more than 61.8% of their recent setbacks and are not far from reaching all-time highs. Indicators that we rarely talk about and that are similar to Bollinger Bands are price channels. For the daily chart we use 20-day price channels. The upper channel is equal to the 20-day high and the lower channel is equal to the 20-day low. The middle channel is the midpoint of the other two channels. There are many ways to interpret price channels. They can be used for support and resistance, overbought and oversold areas, the start of a strong uptrend with a breakout of the upper channel and vice versa. Starting in October 2023, the SPX fell below its lower channel but quickly recovered.