S&P 500 Bears engulfed four years of Bullish pressure just in four weeks. The price suddenly drops from $3390 to $2700 in a few weeks. Let’s check the S&P 500 Technical Analysis for more levels and insights.
March 12, 2020 | AtoZ Markets – S&P 500 recently broke record with a decline after Bears engulfed the four years of Bullish price action. The price dropped gradually with Bearish gaps and now residing near $2700 support area. If the price maintains above $2700 support area, The Bulls may recover higher, but it is still indecisive.
Coronavirus fears led the S&P 500 down nearly 20% from its record gains of the last four years. S&P 500 recent losses are a concern for Wall Street. Now, the question is, how long the Bears will going to dominate the market. The investors are in fear after the World Health Organization classified the outbreak of Coronavirus across the Globe. Further drop-off of Wall Street stocks may push the U.S. economy into the stage of its first recession after the 2008 crisis.
S&P 500 Bears are Totally in-Charge
According to the researchers, S&P 500 has experienced Bear market for the eighth time since the 1960s. The 20% selloff does not mean that the S&P 500 will decline more as like the previous historical drop-off events. As Coronavirus spreading faster, investors are in deep fear of losing money. As a result, the stock market is in a big selloff position, which may lead to a further drop.
The recent U.S. employment data and other key economic factors do not contain any impactful news on Coronavirus outbreak. Many economists think that the epidemic of Coronavirus illness and its effect on the global economy may expand for the longest time. Goldman Sachs previously stated, “The S&P 500 Bull market is likely to end soon, forecasting a 28% slump from its February peak as the coronavirus takes a toll on corporate profits.” The statement has turned quite true by now, and a further 8% drop from the current position can be reached soon.
S&P 500 Bears Engulfed may Hold?
S&P 500 sudden drop push the traders in fears of a probable Recession. After an extended period of Bullish trend in place, S&P Bears engulfed 4-year price action by surprise. The price is currently residing near $2550 and continuously declining. The price is not respecting any of its previous support and gradually slopping down. If S&P 500 keeps falling like this, Bears may push the market further lower towards $2350 area or lower in the coming days.
Image: S&P 500 Daily Chart
S&P 500 may react to Mean Reversion?
According to the Daily chart, the S&P 500 is currently trading at $2550 area and pushing further lower. After significant Bearish gaps in the market, the price reached $2550 area quite impulsively. The Bearish pressure may sustain further as the global economic crisis persists due to the Coronavirus issue.
As per current price action, the Dynamic level of 20 EMA is residing above the current price and $2980 price level. As a result, it may pull the price higher as Mean Reversion creating chances for Bulls to intervene for a specific period in the process.
On the other hand, the MACD lines are slopping lower gradually as the Bearish price action indicating further Bearish momentum in the making. Currently, there is no hope for the Bulls to make a confirmed intervention other than reverting back to the Mean.
To conclude, S&P 500 Bears may continue lower towards the $2350 support area. Though certain upward retrace can occur along the way, it will not affect the overall Bearish bias it is currently in.