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3 Reasons the S&P 500 Should Bounce Tomorrow - True Edge Trading

3 Reasons the S&P 500 Should Bounce Tomorrow

S&P 500

Ouch! After driving upwards at a frantic pace, we saw the market fall HARD in today’s session. The NASDAQ is now back below it’s February peak. The Dow is now testing previous resistance as support. And the S&P 500 lost almost 6% as well.

But looking closer at the S&P 500, we see a few technical clues that may be telling us an upward bounce may be in the cards.

A big drop for the S&P 500 today.

The 3000 Level is in Play

The first clue would be the index value. The S&P 500 closed at 3002 today. The market likes nice, round numbers. No ones quite sure why. They’re easy to remember? It’s where the institutional traders put in their buy/sell programs? We don’t know, but we often see reactions to these major round numbers.

The 200 Period Moving Average is in Play

Today’s fall brings the 200 Period Moving Average back in play as the index closed just below it. Now, the S&P 500 didn’t pay much attention to this indicator on the way up, but it’s worth watching if we see a reaction to it this time around.

Potential Support is Near

If the index falls further, we have potential support at the 2950 mark. This level provided solid resistance in April and May, so it could provide much needed support if tested in tomorrow’s session.

What if it falls through all three of these marks? I’m thinking we should look at below for a strong selloff.

Jeff Drake
True Edge Trading