This is a brief market update as the market’s long and winding road back to the head and shoulders top is largely complete. With the return trip complete and Q1 earnings reports in full swing, it is an ideal time to take a step back and examine each side of the road.

The Road

The 5-year weekly chart below is of the S&P 500 index (NYSE:SPY), which captures both sides of the winding road. The orange lines represent the breakdown zone during the peaking process which spanned the final two quarters of 2021 and first two quarters of 2022. This resistance zone can be thought of as the decaying side of the image above.

The green line represents the primary support level which coincides with the October 2022 bottom. It was also the primary resistance level prior to the market topping process in Q3 and Q4 of 2021. Note that the upward sloping green line depicts the short-term price trend.

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