Financial media headlines talk about the first half of 2022 as the worst in 40 years. It is enough to look at the last week to understand how challenging this period is. Guess you asked yourself during the week, like me, whether the support, which I drew with the blue line, broke down and the market is going to continue to succumb to gravity or is there still a chance for support. I released a few graphs during the week on my social media channels to try and help those who follow. I will start today with the bottom line, which I posted on the networks towards the end of trading on Friday, and that is that, despite the volatility and decline last week, there is a chance that support will work and the market will rise. You could call it that Challenged optimism.
Today we will step by step restore the tracking of theS&P500 During the past week (which I by the way passed with the participation of a digital nomad conference in Bansko – Bulgaria, a conference whose insights we will discuss in our “World House” project) to explain the point of view and the way of working with graphs and performing technical analysis. Later in the article we will talk about China.
The first graph below is the one you know from last week. You see on it the blue support line that marks the lower limit of the price gap (marked with a golden ellipse on the left).
What happened to him? On Tuesdays and Wednesdays he served as a support level and worked excellently. One would assume that the market would really go up from here. In the screenshot below you can see a graph I shared on Wednesday, June 29 at about 7:40 pm (sorry for the impromptu drawings). You can see there how the level of support, which is also reflected in the opening of the price gap that rises on the left, is really being tested in real time.
Then came Thursday
In the following chart we see the same configuration of the chart we started with but I circled four trading days from the last period they are in the configuration Of Doji. A doji is created when the closing gate is close to the opening gate and it teaches equilibrium and market balance. In Thursday’s Doge we see that the opening and closing were in the upper half of the daily swing area and that was a sign that there were buyers in the market. Despite the break of the trend line (blue) the market did not crash. 
And here we come to Friday. Now we move on to the hourly graph. The tension is rising. In the graph above you see the general pattern of Friday: a hollow candle that means closing over an opening. A positive sign. In the chart below, my hourly, you see both the support created on Friday and the closing of the falling price gap (pink oval). Two positive signs that as mentioned show that there are buyers in the area.
The bottom line is that on the one hand we are still around the level of support (blue line, area 3840) – but below it – which is a worrying sign. On the other hand, the market did not “drown” after falling below the level of support and buyers almost brought it back above the water. The graphs I shared today are like a camera placed underwater and checking what’s going on. What is happening is a struggle for life. A struggle I called “Challenged Optimism.”
It follows that the significance of the 3840 level has risen even though this level has been slightly breached downwards. If after all this struggle we see gains on Tuesday, the chances are that they will hold up and lead to a further recovery in the market is higher. And if, after all this struggle, the 3840 zone still turns out to be a resistance zone then it seems the pessimists among us will be able to smile.
I think the signs of the struggle for survival are impressive and have the potential to materialize for the rises. At the moment this is just a thought. The article was written on Sunday. On Tuesday we will know if it materializes in reality.
The Chinese comeback
After China was the black sheep of the markets following the trade war and the regulatory moves that the administration led against a large number of companies one can see on the (purple) graph the signs of strengthening of the basket fund MCHIThe largest investment fund in China, compared to S&P500. You can also see on the graph a breakout of the declining trend line and support in the $ 51 area. Substantial positive technical signs. The next technical challenges are breaking the resistance level and then averaging to 200 days. If we see them materialize, it will be possible to talk about a significant upward trend.
The second largest mutual fund to invest in China is KWEB Which focuses on the online world. On its graph I zoomed in and I display it in a candle configuration. You will see again the encounter between resistance and an average of 200 days. Crossing this meeting upwards will be a bull mark.
In any case, given the relative strength of China compared to the United States (MCHI vs. S&P500), Then the thought of Chinese stocks in the portfolio is relevant. It leaves you thinking what the graphs say about the global economic reality and what message they convey.
Have a profitable week. Being an independent investor is not always easy. Learn from the road. Try to enjoy it too. This week we researched it a little more in depth. Write to me if it helped and what else I can help with. splendor
The author of the article is Ziv Segal (segalziv@gmail.com) who deals in the field of financial markets, technical analysis, behavioral financing and mental training, with various occupations in the field in academia and practice.
* The above should not be construed as a recommendation for the performance of operations and / or investment advice and / or investment marketing and / or advice of any kind. The information presented is for information only and is not a substitute for advice that takes into account the data and the special needs of each person. Anyone who uses the above information – does so at his own discretion and sole responsibility. The company and / or the authors hold and / or may hold some of the papers mentioned above.