Today’s Stock Market Drop – What Next?

This day was coming.  We couldn’t stay tightly coiled in a triangle consolidation forever.  The triangle on the SP500 was forming since September 8th, 2016.

On a day with little economic news, the stock markets took a dive on technical levels, oil output jitters and some Fed speak, closing the day in the red over 1%:

SP500: -1.2%

DOW: -1.1%

Nasdaq: -1.5%

 

Daily Analysis of Stock Market (SP500 Index)

Here is a daily picture of the triangle break-out.

From this daily stock market chart, we can make a few observations from a technical stand point:

  1. Break outside of triangle occurred on heavy volume (left chart)
  2. Despite strong selling throughout the day, the 2,130 level brought out some aggressive buyers around 2:30PM, causing the short-squeeze for the remainder of the afternoon (left chart)
  3. Day session low of 2,128 touches lower Bollinger Band at 2:15PM EST (top right)
  4. Despite heavy selling pressure, price rallied back to the 100 moving average by the close, leaving just a wick below the level, with the candle body completely above (lower right)

 

So Where Does the Stock Market Go from Here?

If only it were that simple.  We would all be millionaires, and a loaf of bread would cost a million bucks.

Bank of Japan’s governor Kuroda is speaking to parliament as of 8:36PM EST, and has made some very dovish remarks:

  • Will ease by means of lower interest rates if merits are judged to outweigh costs
  • Will continue with direction of 80T Yen in JGB purchases
  • These measures can be ramped up when needed, and believe will achieve their yield curve target

Equities love to hear stimulus and dovish remarks.  Tomorrow they may just get their fair share of Central Bank pumping and priming as we have two speakers on the docket out of the US:

  1. Dudley speaks at 8AM EST
  2. Esther George speaks about the “Payments System” in Chicago at 9:40AM EST
  3. Federal reserve releases their meeting minutes from Sep 20-21 FOMC meeting at 2PM EST

Don’t be surprised if the stock market finds its way right back up to the 2150 to 2160 level, where it will likely be met with significant selling pressure.  Remember, the majority of equity gains in the past few years have happened in the Asian and European market sessions, and stayed flat to lower during the US trading hours.

 

Want to Trade with Us?

Of course you do.  Consider yourself invited.

Every Sunday we host an analysis and trade setup webinar, and we plan our week ahead – including all of our trades, levels and events.  Then each weekday, we do a live webinar update at 12:30PM EST to update and show our live trades.  No fake trading, no demo accounts, no simulated results, it is all real money because no one lets me pay my bills with sim dollars.

Join us and trade the stock market with our group of elite and professional traders.

The courses and professional trader development package comes with a FREE 14 day trial!  The live analysis and trades are included as part of the more advanced Earn Package.

 

Sign up for one of our subscriptions and experience the edge of trading with the professionals.

For more information how to day trade successfully, click here.

To find out how to trade more passively with options click here.

 

 

The information contained in this post 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.