Friday's Sell-Off - New Downtrend Or Just Correction?

The U.S. stock market indexes lost 1.8-2.5% on Friday, as investors' sentiment worsened following some global economic data releases. The S&P 500 index retraced more of its October-December downward correction of 20.2% recently. The broad stock market's gauge traded just around 3% below September the 21st record high of 2,940.91. But then it got close to the 2,800 mark again. The Dow Jones Industrial Average lost 1.8% and the Nasdaq Composite lost 2.5% on Friday.

The nearest important resistance level of the S&P 500 index is now at around 2,820, marked by the recent support level. The next resistance level is at 2,850-2,860, marked by the early October local lows. On the other hand, the support level is now at 2,800, marked by the recent resistance level and the daily gap up of 2,798.32-2,799.78. The support level is also at 2,785, marked by the daily gap up of 2,784.00-2,786.73.

The broad stock market retraced all of its December sell-off and it broke above the medium-term resistance level of around 2,800-2,820, marked by the October-November local highs recently. So is it still just a correction or a new medium-term uptrend? The market broke above the 61.8% Fibonacci retracement of the 20% decline. And we may see an attempt at getting back to the record highs. But will the index continue much higher above the mentioned previous local highs? Friday's trading session cast some doubts on bulls' power. However, there have been no confirmed negative medium-term signals so far. The index bounced off the previously broken two-month-long upward trend line:

Daily S&P 500 index chart - SPX, Large Cap Index

Mixed Expectations Following Friday's Decline

Expectations before the opening of today's trading session are negative because the index futures contracts trade 0.2-0.6% below their Friday's closing prices. The European stock market indexes have lost 0.2-0.3% so far. There will be no new important economic data announcements today. The broad stock market will likely fluctuate following the Friday's sell-off. However, if the index breaks below the 2,800 mark, we could see more selling pressure.

1 2 3
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.