SPX gapped down with the rest of the US indices today as overnight futures markets were sold heavily by traders on Covid19 fears. Price closed Friday at $3,337 and closed today at $3,225 for a -3.41% loss making this one of the largest 1-day declines in recent memory.
Not much of a rebound today as price didn't come close to retracing the overnight gap, but traders did manage to hold price just above a previous low of $3,214(blue dashes) which is a price base aka previous level of price demand. The blue line represents the last low in price prior to a new high being made, and with my trend trading system stop-losses should be resting just below that blue line. Should price head lower tomorrow and violate the area of support it would give reason to shift to a bearish view, but for now neutral is the name of the game.
While the drop today was significant and now has price trading below the uptrend channel(orange lines), that gap could fill pretty quickly should traders shrug off virus fears again and return to the manic buying we've seen coming from retail buyers(mom and pops with their commission-free accounts). Should price head lower, the yellow dashed lines are levels to expect some buying to occur, with the upper yellow line at $3,155 being support level 1 and the lower line at $3,070 being support level 2. Level 2 would likely be the strongest since it is just above the psychological level of $3,000 which in itself could cause bulls to come out in full force to defend that price level if they still have conviction in the market rally.
I haven't kept up with any news today, more specifically news coming out of the Federal Reserve in regard to their plans for fighting this decline, but if any Fed officials made statements indicating that the Fed is ready to print more money and/or lower interest rates to fight the economic impact of the virus, I'd expect this dip to be bought with a vengeance by institutions.
Not much of a rebound today as price didn't come close to retracing the overnight gap, but traders did manage to hold price just above a previous low of $3,214(blue dashes) which is a price base aka previous level of price demand. The blue line represents the last low in price prior to a new high being made, and with my trend trading system stop-losses should be resting just below that blue line. Should price head lower tomorrow and violate the area of support it would give reason to shift to a bearish view, but for now neutral is the name of the game.
While the drop today was significant and now has price trading below the uptrend channel(orange lines), that gap could fill pretty quickly should traders shrug off virus fears again and return to the manic buying we've seen coming from retail buyers(mom and pops with their commission-free accounts). Should price head lower, the yellow dashed lines are levels to expect some buying to occur, with the upper yellow line at $3,155 being support level 1 and the lower line at $3,070 being support level 2. Level 2 would likely be the strongest since it is just above the psychological level of $3,000 which in itself could cause bulls to come out in full force to defend that price level if they still have conviction in the market rally.
I haven't kept up with any news today, more specifically news coming out of the Federal Reserve in regard to their plans for fighting this decline, but if any Fed officials made statements indicating that the Fed is ready to print more money and/or lower interest rates to fight the economic impact of the virus, I'd expect this dip to be bought with a vengeance by institutions.