S&P 500 Tests Major Support

The S&P 500 has gapped lower to kick off the trading session on Monday, opening up the possibility of a significant selloff. At that point, the market then found plenty of selling pressure to go looking towards the $4250 level. Because of this, the market looks as if it is trying to chip away at a major support level, and as you have seen during the day, we have had a little bit of a bounce from there. Whether or not it means anything is going to have to be seen in the future, I would not get bullish on this market until we turn around and break above the 200 Day EMA, which is sitting at 4395. Breaking above that would be a very strong sign indeed.

S&P 500 Video 08.03.22

On the other hand, if we were to break down below the lows of the trading session on Monday, to very likely that the S&P 500 could go looking towards the 4200 level rather quickly, followed by the 4100 level. I do not believe that this is a market that you will want to get too aggressive with because it is so narrative-driven at the moment. In an environment like that, moves in both directions can be rather vicious.

This is a perfect environment for the old saying of protection of capital is more important than growing it. Unfortunately, this is a market that has wiped out a lot of traders and probably will continue to do so as volatility is expected to pick up, not drop with so many different things going on in the world at the same time.

For a look at all of today’s economic events, check out our economic calendar.