Earlier this week, I talked about the opportunities the recent market drop might present.
Today, I want to dive deeper into what I’m seeing in the markets right now — especially the key levels to watch closely.
Understanding The Market’s Moves
The recent market volatility has been a rollercoaster ride to say the least.
We saw a sharp drop, with the S&P 500 hitting 10% down from its highs.
As I said earlier this week, this kind of movement can put us in a bearish tone, but it also presents buying opportunities if you know where to look.
One tool I like to use is Fibonacci retracement levels. These levels help us identify potential areas where the market might reverse its trend.
After the S&P hit its low, we saw a bounce back to the 38.2% Fibonacci retracement level.
This is important because it indicates where resistance might come into play. If we can push past these retracement levels, particularly the 50% mark, we might see the market regain some strength.
Below you can see the Fibonacci levels. The one marked 0.382 is the 38.2% level, so the one marked 0.500 is the 50% level.
Key Levels to Watch
Right now, as I write this in the pre-market, the S&P 500 is hovering around the 5239 mark, which is the midpoint of the current range, which I count as being from the bottom, the 0.000 level, to the 0.382 level that it hit during the initial bounce.
This 5239 level acts as a pivot, and whether we move above or below it could indicate the market’s next direction.
If we stay above it, there’s a chance we could retest higher levels, but if we dip below, we might see more downward pressure.
I’m going to be watching the S&P futures closely today to see if we definitively break out above that 5239 level.
In the meantime, I’m going to hold off on trading, because until we either break out firmly above or squarely below that level, the direction the market could take will be a coin toss.
Stay tuned!
— Geof Smith
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