In last Friday’s video, I described several support levels to watch for if there was continued weakness, in which I said: “In today’s video I discuss some major support areas in the S&P 500. Did the market reach one Friday near its lows? Will traders sell positions into the close because they don’t want to be long through the weekend? If it doesn’t hold, the levels mentioned in the video will be even more important.”
In a way, one can argue that today’s action is worse than the run-of-the-mill decline because it happened on a day that had a VERY strong open. The Dow was +300 at one point this morning…and then suffered a huge -526 point decline from that early high. The SP500 traded back above 2700.00, a large gain from Friday’s close, but couldn’t hold its gains either.
As I type this, the S&P 500 has not traded below Friday’s low price; however, there is a support level above that in the 2640.00 zone. If this level is broken. And it looks weak enough that it just may happen, then new daily lows should be on the horizon – absent a special comment from the Fed Chairman or the president.
When the market goes from BUYING any gap-open lower, to SELLING a gap-open higher, I would say that a major change has happened.
“Buy the Dip” has morphed into “Sell the Rip.”