The S&P500 market is called to open near the 1340 key support level. This level was major support in early March and then it provided support a few times last week. But the daily and hourly charts look quite negative now, so it appears the 1340 level will soon give way. Add to the negative chart of S&P500 the fact that Nasdaq 100 is leading on the way lower and that the emerging markets are even weaker. So, the odds do favor a breakdown here. Should this level give way, I would expect a panic sell-off. Why? Because many institutional buyers (mainly hedge funds) may decide to exit all at once. This can quickly bring losses twd 1300 and slightly below. If the bulls manage to somehow save the 1340 level, we may see a reaction rally back twd 1378, but eventually I believe the market will break the 1340 level.
If you remember last week I talked about the news impact using the Apple example. The Apple good earnings was a good example how the market would use a news-driven rally to sell-off. Last week there was another worth noting example: the Cisco Systems (CSCO) news. I encourage you to take a look a the CSCO daily chart. You will see that prior to last week there was a textbook Head and Shoulders’ pattern that had developed for the past 3-4 months. This topping pattern was broken on the downside, i.e. CSCO was already in downtrend. And then on Tuesday the CSCO CEO came out and said he didn’t like the trends he was seeing in the way his customers spent. That scared the shareholders and the stock declined sharply.In this case, the company’s news simply confirmed the new trend that had just started.
Best to your trading,
Alexander
Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.
trendrecognition 