The S&P 500 topped at 2885 level on April 16th, short of crossing to the upside 2900 level and failing to close the gap between 2920 and 2960 levels. It initially tried to rally during the trading session on Tuesday but lost its gains above the 50 day EMA. At this time, the market is looking for support at 2720 level, already below 2793, a 50% Fibonacci retracement level taken from the February top at 3397 to the March bottom at 2189. The next support level is near 2650 (38.2%). We can still go much lower from there, breaking through 2474 (23.6%) level, in the absence of positive news.
As the market is pointing downward, a deeper correction may occur. However, “not so bad” Q1 tech and biotech sectors earnings may save the market from falling much further in the near-term. More so, a possibility of additional fiscal stimulus and active repo markets may play a positive role as well. We may even retest recent April highs at 2800 handle on additional stimulus and economy reopening news. NFLX and TXN are up in the after-market on good earnings reports. As some Q1 earnings look better, than expected, it is downward guidance revisions that may spook the markets to go lower, particularly in anticipation of low Q2 earnings.
As the market is pointing downward, a deeper correction may occur. However, “not so bad” Q1 tech and biotech sectors earnings may save the market from falling much further in the near-term. More so, a possibility of additional fiscal stimulus and active repo markets may play a positive role as well. We may even retest recent April highs at 2800 handle on additional stimulus and economy reopening news. NFLX and TXN are up in the after-market on good earnings reports. As some Q1 earnings look better, than expected, it is downward guidance revisions that may spook the markets to go lower, particularly in anticipation of low Q2 earnings.