Did the S&P 500 Just Bottom?
Equity-market sentiment has tilted heavily toward the bears recently as investors brace for more rate hikes. But there could be signs of nearing a bottom.
The first pattern on today’s chart of the S&P 500 is the 3910 price level. It’s near the peak on July 8 and the low on July 26 – immediately before the index accelerated toward 4300.
The current pullback is pausing around the same area, which suggests it may remain important as support.
Speaking of the current pullback, there could be reasons to view it as an ABC correction that’s now completed.
It also represents roughly a 61.8 percent retracement of the entire move between mid-June and mid-August.
Next, prices slid below the “nice round number” of 3900 yesterday but closed above it. Was that a “false breakdown?”
Finally, a lot of negativity may be priced in. Sentiment indicators like American Association of Individual Investors’ Sentiment Survey and the National Association of Active Investment Managers Exposure Index have dropped to their lowest levels since July.
Meanwhile there have been signs of inflation easing. For example: wages in non-farm payrolls, price indexes in the purchasing managers reports and the slide in crude oil.
The horizon is still treacherous with Jerome Powell speaking Thursday, CPI next Tuesday and the Federal Reserve’s big meeting on September 21. Traders may watch to see if prices manage to hold these levels as the events roll in.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart of the S&P 500 is the 3910 price level. It’s near the peak on July 8 and the low on July 26 – immediately before the index accelerated toward 4300.
The current pullback is pausing around the same area, which suggests it may remain important as support.
Speaking of the current pullback, there could be reasons to view it as an ABC correction that’s now completed.
It also represents roughly a 61.8 percent retracement of the entire move between mid-June and mid-August.
Next, prices slid below the “nice round number” of 3900 yesterday but closed above it. Was that a “false breakdown?”
Finally, a lot of negativity may be priced in. Sentiment indicators like American Association of Individual Investors’ Sentiment Survey and the National Association of Active Investment Managers Exposure Index have dropped to their lowest levels since July.
Meanwhile there have been signs of inflation easing. For example: wages in non-farm payrolls, price indexes in the purchasing managers reports and the slide in crude oil.
The horizon is still treacherous with Jerome Powell speaking Thursday, CPI next Tuesday and the Federal Reserve’s big meeting on September 21. Traders may watch to see if prices manage to hold these levels as the events roll in.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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