The S&P 500 Index was hammered today on fears of a new Covid variant – a good excuse for the market to “create a market”. The timing of this fall was almost exactly in line with our forecast – it just didn’t quite get up high enough to trigger our short entry.
Falls of this magnitude in the SPX 500 almost always result in another low within a week – there are only 2 exceptions to this since August 2019. So, armed with this knowledge and our forecast which shows a correction lasting another couple of weeks, there should be some good low risk/ high reward opportunities.
We have identified 2.
Firstly, if the SPX Index manages to bounce in the next trading session we could see it move up to the red short zone. The closer the SPX moves to the “thick white line” the better as we could get into a position for a 200 point swing down to a final low of 4500.
Secondly, we are looking at some good medium term support between 4400 (which is what the 200 day EMA will be) and 4500 (our unconfirmed but very important trend line). This could give a fantastic long opportunity which may see the S&P to new highs, again!
It’s early days yet on the SPX and very important not to rush into a trade. Time to sit back and relax and see what next week brings.
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