- Summary:
- Coronavirus-induced risk aversion sends the S&P 500 futures lower for the third day running, as new coronavirus cases crop up in Europe & the Middle East.
For the third straight market session, futures on the S&P 500 were sold off, as coronavirus-driven market fears persist. The S&P 500 futures got off to a bright start for the day. Still, any optimism quickly gave way to more pessimism as investors worry about the capacity of Italy, Iran and Afghanistan to handle the explosion of new coronavirus cases within their borders.
The S&P 500, Nasdaq 100 and Dow Jones have been on an incredible bullish run since 2016, and as pointed out in some of my earlier analyses on the S&P 500, the markets were ripe for a correction and were looking for a trigger. The coronavirus outbreak may be just the trigger that markets were seeking As cases have now cropped up in France and fears of uncontrolled the Middle East spread mount, the S&P 500 continues to bear the brunt of investors’ anxiety.
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Technical Outlook for S&P 500
The S&P 500 futures rose overnight, but quickly shed off those gains and is now trading lower in what has been a very choppy session for the asset. Yesterday’s daily candle easily breached the 3156.1 price area but found support at 3117.3. Price activity from today’s candle pushed upwards in pullback mode to the 3156.1 support-turned-resistance but was unable to go any further. This scenario prompted sellers to jump back into the fray to push prices below the 3117.3 support, but so far this price level remains resolute as a recovery that took the S&P 500 back above that level occurred.
All-day long, it has been a struggle between buyers and sellers, driving the S&P 500 back and forth in a battle of supremacy which the sellers presently seem to be winning. A breakdown of 3117.3 confirms the dominance of the sellers and allow them to set their sights on 3018.5, but not without a possible pitstop at the 6 Nov and 3 Dec 2019 lows at 3066.7.
On the flip side, failure to break 3117.3 could allow for a brief recovery on the S&P 500 to 3156.1. 3216.5 remains a viable alternative, but only if the risk-off sentiment in the market can give way.