Following on from yesterday’s post on spread betting stocks, we have an update on the stock markets. In yesterday’s post we wrote that yesterday would be a very important day for the stock markets and it was, but today and tomorrow are now possibly even more important.
As we had written previously, there was major support on the S&P 500 at 1034.8 and this was broken briefly to the downside on Tuesday with new lows at 1030.5 on the September contract. At that point the market had not closed below support but closed just above long term support at 1035.8. Yesterday however, the S&P 500 broke lower again, reaching new lows at 1023.20 and closing at 1026.6 for a new low close this year.
We have written previously that at key points when we get a potential long term trend change that we like to see 2 closes below the prior support and we got the first of these yesterday. If we get another close below support today then that may really open things up for a downside break much lower and this would perhaps be confirmed by the most important close of the week, which is Friday’s close. This Friday’s close carries extra significance as it is ahead of the long holiday weekend in the US for Independence Day.
It is possible that if the market rallies today a bit and closes above yesterday’s highs around 1045 that we may get a crack and snap formation and the market may rally from there for a couple of weeks before we get a major break to the downside towards the end of July.
For now, the Dow 30 and Nasdaq 100 have both held above key long term support (around 9670 on the Dow September contract and around 1728 from the February lows on the Nasdaq) and so that adds to the possible bounce scenario. We will have to wait and see what happens during the rest of today and tomorrow. As ever, we will wait for the market to tell us where it wants to go and then jump on board in the direction of the trend and ride that trend.
Good trading and good luck with spread betting stocks