Dow, S&P 500 Price Analysis
- It’s been a brutal week for stocks with massive sell-offs showing this week.
- Friday trade has thus far seen a vigorous bounce in US equity futures, indicating a gap-up to being this morning’s trade.
- Both the Dow[1] and S&P 500 ran into key levels of longer-term support; begging the question as to whether we’re seeing a short-cover rally ahead of a weekend where traders fear stimulus announcements or, whether this is a long-term value scenario from investors and traders.
Dow, S&P 500 Run into Key Support Areas – but Can They Hold?
Ahead of the US open S&P 500 futures are showing a strong gain, clawing back a portion of this week’s losses after what’s been a brutal outlay for global markets.
Yesterday saw the Fed spring to action[2], and this morning brought hints of similar drives from global governments; making clear that financial markets are taking more seriously the threat of slowdown emanating from the coronavirus.
The overnight rally at this point has been rather large, hitting the limit-up band ahead of the US open after a level of support came into play last night. This is taken from the 61.8% retracement of the 2016-2020 major move; and already prices are pushing up towards the 50% marker of that same study that had previously helped to set support earlier this week[3]. Also of note, a bullish trend-line projection exists around this current low, drawn from the 2009 and 2012 swing lows.
S&P 500 Monthly Price Chart
Dow Jones Bounce from Confluent Support
In the Dow, the support zone that came into play last night was confluent as there were two Fibonacci levels of note in close proximity,
