The long U.S holiday weekend comes to an end today. The S&P 500 has been languishing in lows since last Thursday’s rather steep selloff which did not see a reversal flourish on Friday. Instead the S&P 500 went into the long holiday weekend likely causing more nervousness among large participants. Just one week ago there were whispers about being able to attain the 7,000.00 level in the S&P 500.
Now investors and speculators are considering a bearish direction. The broad marketplace via many assets continues to show a growing amount of shifting behavioral sentiment and this is not a good thing for those with bullish desires. The selloff on Thursday from essentially the 6,977.00 ratio to the 6,855.00 vicinity was fast. Friday’s trading did not save the S&P 500, this even as the Consumer Price Index inflation data came in below expectations.
Worrying Signs and Opinions Cascading
The S&P 500 in many respects has been much better behaved than the Nasdaq 100 over the past handful of months. The S&P 500 up until last week was still exhibiting an ability to traverse higher. Reversals higher after selloffs are often used by day traders who believe upside is going to develop confidently. However, some of that upside confidence might be starting to disappear.
The inability of the S&P 500 to gain on Friday going into a long holiday weekend might have been an indication financial institutions didn’t want to sit around for three days without anything to do and wait for more bad news. Behavioral sentiment is dangerous at all times, particularly when it grows nervous. Today’s results in the S&P 500 will be watched by many market participants hoping for a turnaround. But there signals that headwinds and chatter about an overbought technology marketplace are causing problems.
Looking for Reversal Higher Needs Caution
Some day traders with a contrarian point of view may look at the current conditions in the S&P 500 and believe a reversal higher will occur quite naturally.
- Looking for upside after solid losses has been a time honored part of speculating, but is also carries the potential of getting stampeded by a marketplace that is no mood to behave.
- The S&P 500 around its current values hovering above 6,800.00 is important.
- If the index were to fall below the 6,800.00 in the near-term and sustain the downside momentum, critical support levels will be looked at and potentially come into play via large trading firms.
- Day traders should practice caution today as the U.S financial institutions return to the game and decide how nervous they remain.
S&P 500 Short-Term Outlook:
Current Resistance: 6,835.00
Current Support: 6,805.00
High Target: 6,870.00
Low Target: 6,730.00