S&P 500 Falls Below Stock Market Support Level
In this article:
- Bulls on sidelines with bears raging
- Following ‘systematic bouncing’ patterns
- Staying flexible in last week of summer
Traders may not be out of the woods with the bulls on the sidelines as the bears have gripped the stock market three days running.
The market has dropped below key levels for technical analysis, and Simpler’s traders are watching for more downside price action.
S&P 500 falls below target support
The bear market showed it still has some bite in the last week of the summer with all three major indexes seeing red throughout the Tuesday session.
In the market today, the Dow closed at 31,790.87 points to fall .96% (dropping 308.12 points on the day). The Nasdaq dropped to 11,883.14 points for a 1.12% tumble while the S&P 500 lost another 1.1% to 3,986.16 points.
Simpler’s traders cautioned that the drop could go lower now that the market pushed below the S&P 500 target level at 4,083.
As the market moves away from this target, the focus will be on downward movement, said David Starr, Vice President of Quantitative Analysis at Simpler Trading.
There is “systematic bouncing” in chart signals showing strong patterns, David noted, even in a market pressured from selling.
“This week everything technical has the potential to be sloppy,” David said. “The week heading into Labor Day weekend is often a dreadfully low-liquidity week.”
With three more sessions this week, the stock market is closed Monday for the holiday.
“While the action might be a little bit tricky minute-by-minute, by staying on top of this we can be focused on the broad direction of the trend, David said.
He is focused on key chart levels showing price action to the downside and whether that movement will hold.
A solid break below 3,946 makes it skeptical that the market can turn higher, David noted, and at 3,917 the bear market has buried its teeth in the market for a potential longer term bearish run.
David emphasized that the key to this stock market is staying flexible with how the market moves and adapting as needed.
Key indicators pattern market moves
Two of the key chart indicators that David tracks are Fibonacci levels and Voodoo Lines®.
These help David, using technical chart analysis, pattern market movement using support and resistance levels. The goal is to develop a trading strategy that is conservative and consistent.
Precision targets combined with directional and spread options trading setups keep David in the center of market action in any direction.
Traders can follow David in real-time through the Voodoo Mastery Program.