The U.S. stock market indexes lost between 0.7% and 1.5% on Wednesday, as the investors’ sentiment worsened again. The S&P 500 index remains close to 2,700 mark and it currently trades 6.0% below the January’s 26th record high of 2,872.87. The Dow Jones Industrial Average lost 0.7% and the technology Nasdaq Composite lost 1.5%, as it was relatively weaker than the broad stock market on Wednesday.
The nearest important level of resistance of the S&P 500 index remains at around 2,740-2,750, marked by the previous support level along with Monday’s daily gap down of 2,742.94-2,752.68. The next resistance level is at 2,780-2,800, On the other hand, the support level is at around 2,695-2,700, marked by Monday’s daily low. The support level is also at 2,675-2,680, marked by the late May local low.
The broad stock market accelerated its short-term downtrend on Monday, as the S&P 500 index fell the lowest since the end of May. Will the downtrend continue? Or was it some final panic selling before an upward reversal? It’s hard to say. If the index breaks below 2,700 mark, we could see more downward action. There are still two possible medium-term scenarios – bearish that will lead us below the February low following trend line breakdown, and the bullish one in a form of medium-term double top pattern or breakout towards 3,000 mark. There is also a chance that the market will just go sideways for some time, and that would be positive for bulls in the long run (some kind of an extended flat correction). The S&P 500 index broke below its two-month-long upward trend line recently:
More Uncertainty Along the Support Level
Expectations before the opening of today’s trading session are slightly positive, because the index futures contracts trade 0.3% higher vs. their yesterday’s closing prices. The European stock market indexes have lost 0.1-0.5% so far. Investors will wait for some economic data announcements: Final GDP number, Initial Claims at 8:30 a.m. The broad stock market will probably extend its short-term fluctuations along the support level today. We may see more short-term uncertainty. Is this some bottoming pattern before an upward reversal or just relatively flat correction before another leg lower? For now, it looks like a correction within a short-term downtrend. There have been no confirmed positive signals so far.
