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‘Markets don’t bottom on Friday’: COVID stock roadmap puts these S&P 500 levels in focus next week

After US stocks were affected Big sale on Black Friday After discovering a fast-spreading variant of the coronavirus that causes COVID-19, chart watchers are trying to gauge how deep the pullback can be.

“While we are looking for a pullback, it is difficult to predict how quickly it will happen,” said veteran technical analyst Mark Arbeter of Arbeter Investments. while also potentially erasing the levels of “obscene” positive sentiment that have accompanied the rally.

While it remains unclear how the newly discovered variant in South Africa will prove to be, investors sold stocks and other assets deemed risky on Friday, piling up assets. safe haven like Treasury and gold.

Read: WHO names coronavirus variant from South Africa ‘omicron’ and designates it as ‘worrying variant’

S&P 500 SPX fell 106.84 points, or 2.3%, at 4,594.62, its lowest end since October 27, leaving it down more than 2% from its record close from November 18.

Dow Jones Industrial Average
DJIA

fell more than 1,000 points at the session low and ended the day down 905.04 points, or 2.5%, for its biggest one-day percentage and percentage decline in 2021. Nasdaq Composite
COMP

down 2.2%.

See: World takes action as new coronavirus variant emerges in southern Africa

The holiday trading conditions are said to amplify market moves; stock trading ends at 1 p.m. Eastern after US markets are closed on Thursday for the Thanksgiving holiday.

In the chart below, Arbeter shows that key support levels for the S&P 500 are grouped together.

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Arbeter Investments LLC

“In theory, the probability of the market stopping in an area with multiple supports close together is higher than a random number of points on the chart. Although, this doesn’t always work, it does keep us going,” wrote Arbeter.

The S&P 500 index fell to as low as 4,585.43 and closed below the first support Arbeter identified at 4,634 – a 23.6% retracement to the index’s rally since October. also took away the next layer of support at 4,600, the middle “Bollinger Bands” on the daily price chart. Bollinger Bands chart the standard deviation from the asset’s simple moving average.

Below that, the first set of support levels is found at 4.570, the 50-day exponential average; 4,566, 38.2% retracement of the rally; and 4,550, the previous high from early September.

According to him, the second cluster starts at 4,525, the 50-day simple average, and is followed by 4,512, the 50% retracement of the rally; 4,500, the middle Bollinger ban on the weekly price chart, and 4,490, the 21-week exponential average.

After that, trendline support receded from its lowest since March of 4,460, he said.

“The stock market lost ground on Black Friday and wobbled into the weekend,” Arbeter said near the end, in emailed comments. “They say the market doesn’t bottom on Friday, so a lot of people are looking for lows early next week,” with weekend news headlines set to be a big determinant of price action on Friday. Monday.

https://www.marketwatch.com/story/u-s-stock-markets-covid-selloff-puts-these-potential-pullback-lows-in-focus-analyst-11637939870?rss=1&siteid=rss ‘Markets don’t bottom on Friday’: COVID stock roadmap puts these S&P 500 levels in focus next week

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