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Fan Yang

S&P500 (SPX) - Prepare for a Return to 2018 Lows

Markets are reeling still, and I continue to get rotate into cash to prepare for further downturn. Looking at the price action of S&P500, we should not be surprised if it comes back to the 2018-lows.

SPX Daily Chart

(click to enlarge)

Crossing the Moving Averages:
- The daily chart shows price crossing below the 200-, 100-, and 50-day simple moving averages (SMAs).
- Furthermore, we saw price rebound last week, but failing to climb back above the cluster of SMAs. Instead, price retreated from 2800.
- The reaction here suggests SPX is indeed in a correction mode. 
- In this scenario, the next critical support is in the 2550-2600 area, which represent the 2018-lows.
- I think we should NOT expect any significant buying until price drop to these levels.
- Then, the upside is probably limited since the market would be in consolidation/correction mode. 
- 2700 for example, is a viable bullish outlook from the support area and 2800 would be an aggressive bullish outlook in the current consolidation mode. 

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