On Feb 6, we shared an important $SPX chart with our readers and wrote :
When $SPX price is 25% or more above its 200-week EMA level, it’s a reliable signal that stocks are very overbought, and are vulnerable to a serious sell-off. This type of sell-off qualifies as Down Trend because it typically takes $SPX price back to the 200-week EMA level, and it tends to last multiple weeks.
From that date onward, we continued to recommend to our readers to consider gradually “selling high” the stock portion of their long-term portfolio.
We did not anticipate though how low stocks would go and how fast it dropped. The magnitude and speed of last week’s drop certainly took everyone by surprise. The Wall Street Journal’s main headline this morning was “Stocks were soaring. What happened?”
Stocks are certainly in a Down Trend now. The question is how long will this Down Trend last and how low will it go?
For that we offer to you the following chart. This is $SPX weekly chart from 2015 until now. It shows some key resistance levels for $SPX to surpass during the upcoming bounce. It also shows the key support levels that $SPX will continue to retest on when the Down Trend resumes again.
To view the charts, read the full article which covers:
Short-term Support & Resistance Levels
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