S&P 500 Trading Outlook (3-5 Days): Bearish
The trend erased 1.5% on Thursday and could set the stage for additional weakness into next week. The key will be 398 on the S&P 500 ETF (SPY), 3947 on the S&P 500 Index (SPX), and 3935 on S&P 500 futures (ES_F)… until/unless these levels are exceeded, it is right to be bearish/neutral.
The early 40 point reversal prior to the open on Thursday came within 2 ticks from 3980 and provided some clues as to the potential for markets to turn lower. Then, when the S&P 500 index violated the Wednesday’s lows at 3927 it was a sign of structural weakening. That said, it all began with NASDAQ weakness.
Overall, it’s not a huge decline (Yet) and Financial stocks still finished positive. That said, weakness in technology stocks resulted in many sectors following suit and turning lower. As I relayed Wednesday, the following concerns have put me on alert for possible downturn in the near future. 1) Tech lagging 2) momentum divergence 3) Demark sells 4) Cycles turning down into late March 5) Defensive outperformance on the rise.
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Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.