SP500 Testing Do-Die Support

Stocks are seeing a pretty strong and aggressive decline, interestingly right after Nvidia delivered earnings that beat expectations, so it looks like the market still wants to move lower as AI-related valuations in the tech sector are simply too high and the market needs a deeper retracement. What stands out is that the S&P 500 has now retraced perfectly back to that October 10th Friday gap, when we saw a massive 3.5% sell-off in just one session, so I’m wondering if this zone could act as an interesting support for a potential rebound.

Keep in mind that despite the weakness in stocks over the last few sessions, we are not seeing that much strength on the dollar as you would normally expect in risk-off; so if stocks rebound the dollar could also slow down, ideally around 100.35–100.65 where the upside could be limited at the upper side of a wedge formation. I really want to see how the market will close today, because if we get a positive reaction in stocks then we may have some reason for a bounce next week, but if not and the market fails to recover today, then I’m afraid we can see much lower levels on the S&P 500 while DXY invalidate the diagonal formation.