S&P 500 Still Above 4,500 – Have Stocks Bottomed?

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S&P 500 Still Above 4,500 – Have Stocks Bottomed?

The S&P 500 index broke slightly below the 4,500 mark on Friday, but it bounced from that support level again. Is this a bottoming pattern?

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The broad stock market index lost 0.84% on Friday following Thursday’s advance of 1.4%. On Friday the index fell the lowest since the October 19 and it went below its early September local high of around 4,546 again. Overall, it lost 5.24% from the Nov. 22 record high of 4,743.83. Stocks fluctuate since last week’s Wednesday, so is this a bottoming pattern? For now, it looks like a flat correction or a consolidation within a downtrend. This morning the broad stock market is expected to open 0.4% higher and we may see some more short-term consolidation following the recent declines.

The nearest important support level is still at 4,500. On the other hand, the resistance level is at 4,580-4,600, marked by the recent local lows. The S&P 500 remains below its short-term downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500

Nasdaq 100 Broke Below the 16,000 Level

Let’s take a look at the Nasdaq 100 chart. The technology index remained relatively stronger than the broad stock market recently but on Friday it broke below the support level of 16,000 and it was relatively weaker than the S&P 500 index that day. The tech stocks’ gauge fell below the early September local highs, as we can see on the daily chart:

Nasdaq 100

Conclusion

The S&P 500 index slightly extended its downtrend on Friday and it was 5.24% below the November 22 record high. So it is still just a downward correction and not a new bear market. But we may see some more downside. For now, it looks like a consolidation within a downtrend, as there have been no confirmed positive signals so far.

Here’s the breakdown:

  • The S&P 500 slightly extended its short-term downtrend on Friday.
  • A speculative short position is still justified from the risk/reward perspective.
  • We are expecting an over 5% correction.

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Thank you.

Paul Rejczak,

Stock Trading Strategist

Sunshine Profits: Effective Investments through Diligence and Care


The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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