S&P 500 Futures – When Do You Take a Bounce?

Stock futures turned sharply lower Wednesday, indicating no respite from the selling that has taken 6.28% off the S&P 500 over the last two days. 

26 February 2020 | HYCM – I came across a thought-provoking article on Market’s Live Blog this morning on the S&P 500 futures chart. The piece was suggesting that some buyers might be buying S&P 500 futures this morning on the premise that after four big down days then a correction is due.
Here was the chart:

Coronavirus is getting worse

The spread of the virus is much worse now. We have new cases popping up everywhere and my gut instinct is that this is now definitely going to be a global pandemic. I can’t see the Olympics or the Euro’s going ahead and we are in for a rough ride. One US CDC official was on the wires saying that it’s not a question of ‘if’, but ‘when’ it becomes a pandemic. However, markets do not fall in a straight line. For those long term equity investors, we are getting some low levels to load up on longer-term longs. Nice. So, if you have a 10+ year framework, there are nice bargains ahead and set to get cheaper.

S&P 500 Futures – when to take a bounce?

The thrust of my article is to ask the question, ‘when do you take a bounce from a large fall?’  I was looking at the S&P 500 yesterday tempted to take a long. I’m not now as the market mood is firmly down, but I was at least looking for some kind of reversal from the stochastics to indicate a turning point alongside some softer news.  Otherwise, it seems that you would just be trying to catch a knife.
So, how about you? What will you need to potentially buy into these large equity falls? Do you have a rule of thumb that you go by?


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