SPX News by Simon Kazinsky on 09:36 December 16, 2018 EST
The main US indices are approaching an important support that may give temporary relief to an otherwise clear downtrend for the american stock market.
We successfully called the US stock market top in early Octoboer as the S&P 500 reached 2,940 we had previously pointed back in July as the likely level at which the reversal would occur.
The ride has been great for bears and many of the US blue chips are below their previously supporting moving averages.
However the S&P500, as shown above, still needs to break below its long term supporting moving average at which the market reversed its previous declines twice in 2016. One of these occasions was at the time of the US elections when Trump was elected and the initial reaction was a sharp US equities drop.
This moving average sits now at around 2,580 so its very close to the current 2,601 at which the market closed last week.
The US30 index did close last week right below its equivalent supporting moving average.
Any significant recovery at the opening of the futures market on Monday may signal a temporary recovery and so it could be a good time to close some shorts and take profits off the table with the view to reopening those positions at then end of this potential short term uptrend.
If the market continues to drop then the next level that could provide support in the SP500 chart would be around 2,508. Reaching this mark would put the instrument into an oversold level similar to those experienced in previous corrections in the years 2000 and 2007. This bottom, again, should only be considered temporary.
Meanwhile, retail traders are now heavily long and this is good news for bears.