Bottom line:  SPX500 long term bearish structure remains intact until prices broadly stay below 3400 mark. The counter trend rally that began from 2180 levels since March 23, 2020 could be close to terminating around 2850/2930 levels.

Fundamental Outlook:

The SPX500 slid by over 2.5% yesterday closing at 2773 levels. The drop has been backed by earning reports suggesting loan defaults to rise alarmingly. The indice could be at risk to resume its slide as IMF economic report for 2020 suggests decline in Global GDP by 3%. The earning season would add further pressure.

Oil prices continue to slide lower as WTI Crude dropped below $19.25 though marginally. Despite the production cut agreed by the OPEC members and a truce between Russia and Saudi Arabia, the slide continues.

Today’s events:

Bank of England Liabilities/Credits Survey @ 04:30 AM EST

Initial US Jobless Claims @ 08:30 AM EST

Technical Analysis:

SPX500 counter trend rally might be soon approaching strong resistance around 2930 levels. Please note that 2930 is marked by fibonacci 0.618 retracement of the entire drop between 3400 and 2180 respectively. Hence, probabilities of a bearish reversal remains high if prices manage to reach 2900/30 zone.

SPX500 has hit the fibonacci 0.50 retracement around 2850 and reversed lower. An engulfing bearish candlestick pattern has produced on the daily chart, indicating potential reversal ahead. Let us be prepared for a reversal from here or 2900/30 levels, going forward.

Initial drop from 3400 to 2180 was an impulse indicting the correction is yet incomplete. The recent rally towards 2850 is nothing but a correction and it is just a matter of time, SPX500 resumes its journey lower again.

Most traders might be willing to initiate fresh short positions around 2850/2930 with a protective stop above 3400 and projected targets below 1500 mark.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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