Wall Street is set to open higher today, and S&P 500 futures were up over 3.9% in overnight trading. The selling on Monday trigged a trading halt of fifteen minutes early in the day as the Dow was down over 2,000 points. The coronavirus was the main culprit of the selloff, along with a plunge in the price of oil that matched the pullback during the 1991 Gulf War. Investors will be looking to Washington D.C. and President Trump’s news conference later today.
The S&P 500 moved below support at 2855.94 to close at 2746.56 on Monday. Volume was heavy, and the RSI index moved below the important 30 level to close at 271.13. So, there was conviction in the selling which resembled a panic sell-off. New support could potentially come in at 2728.81 and then 2603.54, with the worst case being 2532.69. The index is now flirting with bear market territory for the first time since 2008. A relief rally should be in the cards today, but we feel sellers will be lurking at important resistant levels if they should get tested.
We are currently long-term bullish and short-term bearish.
John N. Lilly III
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJ
Dominguez & Jones Wealth Management Group
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
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