So despite the horrendous week reminiscent of the kinds of movements seen back in the financial crisis, if there's a little bit of light at the end of the tunnel, SPX managed to come off its lowest levels for the week (2855) and close above support level at 2950 (ish). If we had closed below 2855, then we would be looking at the next meaningful support near 2740 (ish). Below that we'd beed looking at nearly uncontested further downside move in to the 2600's and then 2300's.
However, longer term technicals still remain negative and while we have to see what news comes out over the weekend, with the new week may bring in some courage in buyers who are looking to nibble on some beaten down positions. If we manage to stay positive Monday, then we may move sideways here between 2950-3020 levels for the week as we watch the technicals and see if they start to improve and gain momentum higher. If we make a move above and close the week above 3020, that would be positive, and may change and hold back the downside momentum while markets contemplate the effects of the virus going forward.
This is a distinct possibility by looking at the short term technicals, as seen on the 2 hour chart, if VI is able to get above the moving avg line and the RSI break out of its oversold levels. Just because it breaks above these technical levels doesn't mean that SPX will skyrocket upward, barring an announcement that corona virus is a hoax and everyone's instantly fine :). Most likely scenario is that markets may move sideways and build momentum and be choppy in the next few sessions.
But if we see futures deteriorate going in to market open on Monday and we have a aggressively negative close, then we have to assume that SPX will be more likely to retest the support level that it bounced off of in the Friday session, and perhaps even close below them for the week, which will signal more downside for the month.
Watch these technical levels and understand that, while a particular move above and below levels is notable, whether that's getting above the moving average or an oversold RSI level, what's more important is how long it can stay and maintain itself over these levels, and building of momentum toward a certain direction. Enjoy the weekend and for those of you living in affected areas of the corona virus, stay safe.
However, longer term technicals still remain negative and while we have to see what news comes out over the weekend, with the new week may bring in some courage in buyers who are looking to nibble on some beaten down positions. If we manage to stay positive Monday, then we may move sideways here between 2950-3020 levels for the week as we watch the technicals and see if they start to improve and gain momentum higher. If we make a move above and close the week above 3020, that would be positive, and may change and hold back the downside momentum while markets contemplate the effects of the virus going forward.
This is a distinct possibility by looking at the short term technicals, as seen on the 2 hour chart, if VI is able to get above the moving avg line and the RSI break out of its oversold levels. Just because it breaks above these technical levels doesn't mean that SPX will skyrocket upward, barring an announcement that corona virus is a hoax and everyone's instantly fine :). Most likely scenario is that markets may move sideways and build momentum and be choppy in the next few sessions.
But if we see futures deteriorate going in to market open on Monday and we have a aggressively negative close, then we have to assume that SPX will be more likely to retest the support level that it bounced off of in the Friday session, and perhaps even close below them for the week, which will signal more downside for the month.
Watch these technical levels and understand that, while a particular move above and below levels is notable, whether that's getting above the moving average or an oversold RSI level, what's more important is how long it can stay and maintain itself over these levels, and building of momentum toward a certain direction. Enjoy the weekend and for those of you living in affected areas of the corona virus, stay safe.