The S&P 500 settled at 2607.75 and has lost 7.6% since Thursday’s close. Today’s session stalled at a high of 2763, and failed to hold the key level at 2757, a trend line and Friday’s close. Price action began cascading below the overnight low of 2733 and all bets were off once our rare major four-star support at 2690-2700 was taken out.
So, what’s next? In the last 30 minutes, the S&P failed to regain 2700 with a high of 2697; this will now be major three-star resistance and a line in the sand to neutralize this weakness. The 100-day moving average comes in at 2634.50 and will be a key pivot level that the market is likely to see multiple times before tomorrow’s close. The real question right now is whether the selling is done? The short answer is no. It is very likely we will see selling upon the Asian open this evening and/or selling upon the European open in the early hours of tomorrow morning. If today’s low and what is now major three-star support at 2592.50-2595.75 is taken out, the door lower remains wide open to a level that aligns with the 200-day moving average at another rare major four-star support. However, we are looking at two key events tomorrow that should be helpful.
First, St. Louis Fed President Bullard speaks at 7:50 a.m. Central. Back in October 2014, there was one week of sharp selling that ended in a V-shaped recovery. A key catalyst in that bottom was dovish comments from Bullard. Now, what tone will he set tomorrow in a new Fed regime with Powell at the helm? Secondly, it is important for traders to remember tonight that it is unlikely that we will bottom before Europe closes tomorrow at 10:30 am Central. Good luck trading tonight and we will follow up with the Morning Express first thing tomorrow.
Resistance: 2646.25**, 2658.25**, 2697***,
Support – 2606-2607.75**, 2592.50-2595.75***, 2556**, 2424.75-2531.50****