S&P 500 Sold Off – Was It Just a Correction?
The S&P 500 extended its Wednesday’s decline yesterday – is this a new downtrend?
The broad stock market index lost 0.76% on Thursday following its Wednesday’s decline of 1.6% after lower than expected Producer Price Index release and some hawkish remarks form the Fed Members. The broad stock market’s gauge broke below the 3,900 level yesterday and the daily low was at 3,885.54. The market retraced more of its recent advances after a brief consolidation along the key 4,000 level.
The S&P 500 is expected to open 0.1% higher this morning, so we will likely see an uncertainty following the sell-off. Recently the index retraced most of its December decline, but it failed to remain above the 4,000 level, as we can see on the daily chart:
Futures Contract – Consolidation Along 3,900
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Wednesday it reversed its advance after reaching slightly above the 4,030 level, and yesterday the market went close to 3,900. The support level is at 3,900, and the resistance level is now at 3,950, among others.
Stocks are expected to open virtually flat this morning. The market may trade sideways following the recent sell-off. For now, it looks like a short-term downward correction, but overall, the broad stock market is extending its over half-year-long trading range.
Here’s the breakdown:
- The S&P 500 index broke slightly below the 3,900 level, as it extended its Wednesday’s Sell-off.
- Investors will be waiting for the coming earnings releases.
- In my opinion, the short-term outlook is now neutral.
Stock Trading Strategist