S&P 500 Technical Outlook: Retest or Something More Sinister?
S&P 500 Technical Highlights:
- S&P 500 fell sharply the past three sessions, brings rebound into question
- A major lower-high in the works or retest of prior low?
- Big levels/lines and technical considerations outlined
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The past three days have brought a substantial amount of selling following the rebound off the Feb low. How developments unfold in the days to follow could hold significant implications, as a big lower-high may be in place. But we still can’t rule out a retest, settle out, and trade back higher just yet, though.
Where a low develops is critical. If we see a modest amount of selling from here but then the market quickly starts a recovery a good distance away from last month’s low, then this gives the long-side of the tape a better shot at seeing a move back towards new record highs.
If more heavy selling continues then in comes the very important trend-line dating back to the February 2016 low, along with the 200-day MA which is riding side-by-side with it. With the S&P sliding that far back down after such a strong bounce, enough technical damage will have been done on two declines that the likelihood we’ve seen a larger top carved out, increases significantly.
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S&P 500 Daily Chart
In this case, sure we might see another rally from long-term support, but the chances that it fizzles out in fairly short order would be high. All-in-all, we’re quickly approaching a cross-road from which the market needs to decide.
It makes the outlook a little tricky at the moment to get a handle on, but with a little patience we should find clarity soon enough. One thing is for sure, volatility is back, and that’s certainly a good thing for traders.
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---Written by Paul Robinson, Market Analyst
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