S&P 500 Price Forecast – Stock markets get hammered on Wednesday again

The S&P 500 broke down rather significantly off the open on Wednesday as we continue to see a lot of problems around the world. Quite frankly, there are a multitude of reasons to believe that the stock market would struggle.
Christopher Lewis
S&P 500 daily chart, August 15, 2019

The 2 and 10 year yields have inverted in the United States, something that portends a looming recession. That being said, it’s only one reason to think that the stock markets will struggle. Beyond that, we have the Chinese looking to take over Hong Kong and perhaps cause some type of major crisis. We also have the bond markets spiking higher, as money looks for safety. Global growth seems to be slowing down, and of course nobody’s really clear as to what the US/China trade situation is going to end up looking like.

S&P 500 Video 15.08.19

And of course, we still have the Brexit. The Brexit is always there and may be there until the end of time.

We are currently trading between the 50 day EMA above and the 200 day EMA just below. At this point, the market is likely to continue to bounce around between these two moving averages, but if we do take out the 200 day EMA on a daily close, it is possible that we start breaking down rather significantly in reaching towards the 2750 handle, possibly even the 2700 level after that. All things being equal I like the idea of playing a bit of a range bound market as we are perhaps a bit oversold for the session. That doesn’t mean that we are going to get some type of major reversal, just that we might be a bit overdone. I think the next several sessions will continue to show a lot of choppiness but you have to recognize that the sellers are starting to gain a little bit of an upper hand.

Please let us know what you think in the comments below

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