S&P 500 Support Becomes Resistance
After a nice solid bounce over the last week, the market is beginning to pull back. Why is this happening and what can we expect next? Previously I had posted that the 3850-3950 region was a key area of support. Once that level was broken, this region is now a key area of overhead resistance. Here are two scenarios on how this might play out.
1) The most likely scenario is one more down leg to at least 3500. The 3200 level is a possibility still, but a lot of the bad news is factored. Another significant geopolitical or economic crisis is needed to reach 3200. The fact that there was strong volume on this recent bounce (see chart) means that institutions are beginning to buy at these levels.
2) Best case scenario is an up day this week on strong volume with a close above 4000. This would indicate a short-term bottom at least and there will be continuation.
Trade safe.
1) The most likely scenario is one more down leg to at least 3500. The 3200 level is a possibility still, but a lot of the bad news is factored. Another significant geopolitical or economic crisis is needed to reach 3200. The fact that there was strong volume on this recent bounce (see chart) means that institutions are beginning to buy at these levels.
2) Best case scenario is an up day this week on strong volume with a close above 4000. This would indicate a short-term bottom at least and there will be continuation.
Trade safe.
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