Market Tumbles this Week – Will it Continue?

Market Roundup

Markets pulled off a technical retracement exactly as we predicted last Sunday, but the move was much sharper and violent, suggesting we could be in for a corrective move much lower.  Last Sunday in our email list we spoke about the three main catalysts for a sell off after touching the 2117 SPX resistance level.

Friday market a very bearish day, with prices blowing right below the 100 and 200 day moving averages.  The index did not even flinch while breaking below these levels, and closed 10 points below at 2023.60.

Looking at the chart below, we can visibly see the extent of the damage inflicted this week:

 

Momentum has turned bearish, with the MACD indicator crossing into official selling territory, with RSI and Stochastics mutually agreeing with the downtrend.

 

The key support levels to watch for this week on the SP500 are:

  • 2020
  • 2010  – 2008 is the 38% fibonacci retracement
  • 2000  – psychological resistance on even price point
  • 1990  – Sep 17th close after Fed no rate hike announcement

 

After the carnage of this past week, we can expect the market to take a short pause and settling into a consolidation before eventually continuing lower.

 

 

News Events for Your Calendar

The disappointment of this week was the weak retail sales data.  It is estimated that as much as 80% of the USA’s economy is consumption based.  With lower retail sales means there is less appetite for spending, and hence potential current and future weakness for the overall economy.

Also, we all know that the trading week would not be complete if we did not have some Fed speculation on interest rates. One thing is for sure, the markets did not like what each of the 6 members said this week and sold off sharply as they continued speaking:

 

 

 

This week, we have a prepared fed statement and the meeting minutes will be released on Wednesday November 18th at 2pm.  Expect some volatility and price swings leading up to, throughout and after this event.  We are being cautious starting noon and trading lighter volumes through the close of the session.

Weekly unemployment claims will be coming out on Thursday at 8:30am, and market participants will be looking for clues on rate hikes.  The question is, will good news be bad news for the markets?

 

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The information contained in this presentation is solely for educational purposes, and does not constitute investment advice.  The risk of trading in securities markets can be substantial.  You should carefully consider  if engaging in such activity is suitable to your own financial situation.  TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.