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S&P Setup for a Snapback Bounce

market is extremely oversold following recent decline. Like a rubber band, stocks tend to snap back to the mean if they have dropped too far from the “fair” value. With that said, if lower stock prices create some values for investors, then, given everything being equal, the market should be able to find some buyers. However, give the significant damage that had been done over the past few days, we may need to see evidence of exhaustive selling to suggest that near-term risks are ebbing. S&P’s 2700 is the line in the sand. A close below that level could trigger a torrent of selling, which would eventually push the S&P down to the early 2018 lows

S&P Broke Key Support but Oversold Conditions Could Help Minimize Downside Follow-through

the long awaited downside correction unfolded Wednesday, leading to a test of support at S&P’s 2785, or the bottom of its short-term trading range. Market internals deteriorated but oversold conditions could help minimize downside follow-through and widespread breakdowns. Nevertheless, we may need to see evidence of exhaustive selling to suggest that near-term risks are ebbing

S&P in Holding Pattern

market is in holding pattern as traders are watching to see whether or not the S&P can hold above 2880. Money Flow measure and momentum had been deteriorated, suggesting that the support might not hold for long. A failure to hold above key price level means that long-term buying pressure has finally been exhausted. On balance, we remain near term neutral/negative for S&P as we believe market vulnerable to some downside retracement over the short-to-intermediate term

S&P Bullish Doji Candlestick Pattern Signify Impending Trend Reversal

the bullish reversal doji candlestick pattern in the S&P together with the short-term oversold condition suggested strongly that the market is at or very close to a significant near-term low. So it wouldn’t surprise us to see at least an attempt to rally over in the coming days

S&P Vulnerable to Further Downside Retracement

volatility has been increased as S&P tested key support level. While there is a low probability of a full blow correction we remain near-term negative for S&P as we believe market vulnerable to some downside retracement over the short-to-intermediate term

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