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Christopher Lewis
S&P 500 daily chart, August 26, 2019

The S&P 500 initially tried to rally during the trading session on Friday but has broken down significantly from the 50 day EMA, as we continue to consolidate overall. The 200 day EMA underneath will offer plenty of support, but if we were to break down through the most recent lows, we could continue to go much lower. When you look at the action as of late, you can make an argument for a bit of a symmetrical triangle. At this point, it does look like we are struggling and I think that with the trade war continuing, it makes sense that stock markets might get hit.

S&P 500 Video 26.08.19

If we were to break down below the 2800 level, then I think the market accelerates to the downside. To the upside, if we do break above the 2950 handle, then we could go looking towards the 3000 level, possibly even the recent all-time highs. All things being equal though, one thing that you should pay attention to is the fact that momentum is starting to decline, and that’s generally a sign of serious trouble. I think fading the rallies will probably continue to work in the short term, but I would not be surprised at all to see some type of flush lower after what we have seen over the last couple of weeks and of course the fact that the Chinese have retaliated in the tariff or. Beyond that, Jerome Powell failed to be overly dovish in his speech, so stock markets might be a bit disappointed.

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