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Christopher Lewis

The S&P 500 has had a wild day, initially gapping lower and then reaching down to the 2400 level. However, the market then rallied towards the 2600 level. At this point, the market is very likely to continue to find sellers on these rallies, and one can make an argument that a lot of short covering was probably going on heading into the weekend. After all, governments around the world are going to start to do something about the coronavirus situation, and that could lift markets. The last thing you want is to be is holding the bag when the market opens on Monday if it gaps against you.

S&P 500 Video 16.03.20

I anticipate that the market still is a “fading the rallies” type of situation, but if we were to break above the gap at the 2900 level, then we could send this market much higher. I think at this point though, we are a long way away from a recovery, and there needs to be a bit of a base building process. This takes time, and quite frankly that is the biggest thing that I think could help this market. Headlines will get worse before they get better, so those who are longer-term traders will probably be getting involved in small bits and pieces. Short-term traders are probably going to continue to fade rallies, with an eye on the 200 day moving average as a potential resistance barrier. If we can break above there, then obviously would be the first really strong sign of a complete trend change. For what it’s worth, the 200 week EMA has been broken as well.

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