Bottom line:  SPX500 bearish structure is intact until prices stay below 3400 levels going forward. Bears seem to be poised to drag prices further below 2300 levels before producing any meaningful rally.

Technical Analysis:

SPX500 has been presented today, as we re-look into US and European markets amidst huge selloff accompanied by the Corona scare across the globe. We present the potential wave counts again to project short to medium term outlook. After having terminating 5 waves around 3400 mark around February 19, 2020 the SPX500 has been completely in control of bears. The first sharp drop between 3400 and 2854 was an impulse labelled as Wave 1 here. Wave 2 was a sharp corrective rally towards 3101, which hit the back side of the support turned resistance trend line and also terminated around Fibonacci 50% retracement of Wave 1. Since then, Wave 3 has been progressing sharply lower and has carved lower degree waves i, ii and iii around 2697, 2880 and 2394 respectively. Please also note that it has reached the 1.271 Fibonacci extension of Wave 1at 2445 and has exceeded towards 2394 intraday lows, before reversing sharply. The recent intraday rally has been sharp appreciating the SPX500 by over 6% in a matter of few hours. It might seem to most traders that the indices has finally bottomed out and is ready to resume higher again. We would bring in a word of caution here as it might just be considered as a sharp lower degree wave iv, within Wave 3 drop. Please note that Wave 3 usually travels up to Fibonacci 1.618 distance of Wave 1 and it seems to be below 2300 mark. Wave iv is expected to terminate around 2582 levels, before SPX500 resumes lower again to move towards 2300 and lower to terminate Wave 3.  

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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