More Fear As Stocks Continue Lower

The U.S. stock market indexes lost 1.5-2.2% on Wednesday, as they accelerated their sell-off following the Fed's Rate Decision release. The S&P 500 index fell below the level of 2,500, and it traded 15.4% below September the 21st record high of 2,940.91. The daily low was at 2,488.96. The Dow Jones Industrial Average lost 1.5% and the Nasdaq Composite lost 2.2% on Wednesday.

The nearest important level of resistance of the S&P 500 index is now at 2,530, marked by some recent local lows. The next resistance level is at 2,580-2,600, marked by the previous level of support. On the other hand, the support level remains at 2,490-2,500, marked by some previous medium-term fluctuations. The support level is also at 2,400-2,420, among others.

The broad stock market broke below its two-month-long trading range recently, as the S&P 500 index fell below the level of 2,600. The downward correction reached more than 15% from the September all-time high, surpassing January-February correction of around 12%. Is this a long-term bear market? For now, it looks like a medium-term downward correction. However, there have been no confirmed positive signals so far. The index fell below the February local low, as we can see on the daily chart:

(Click on image to enlarge)

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

Slightly Positive Expectations Following Wednesday's Sell-Off

The index futures contracts trade between 0.1% and +0.3% vs. their Wednesday's closing prices. So expectations before the opening of today's trading session are virtually flat to slightly positive. The European stock market indexes have lost 0.3-1.3% so far. Investors will wait for some economic data announcements this morning: Initial Claims, Philadelphia Fed Manufacturing Index at 8:30 a.m., CB Leading Index at 10:00 a.m. The broad stock market may fluctuate along the level of 2,500 for some time. There will likely be attempts at retracing some of the recent decline. However, there have been no confirmed positive signals so far.

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Disclosure: None.

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Alexis Renault 3 months ago Member's comment

I have to admit, this continued downtrend is starting to get me a little freaked! I'm new to investing but all my investments are down right now.