Watch the 200-day moving average, Feb. 9 intraday low: Maley
S&P 500 could find secondary support near 2,467: Stockton
The S&P 500 Index was trading at session highs Wednesday afternoon after reversing a loss of as much as 1.6 percent, a choppy pattern that has become a familiar characteristic lately. The index has been marked by moves of at least 1.3 percent in both directions in just the past three days.
The tumult has been enough to cause seasickness in Wall Street chart-watchers. Here are some of the key levels they’re paying special attention to now:
To Matt Maley, a strategist at Miller Tabak, the most important short-term levels to watch are 2,581 and 2,532. The S&P 500 closed at 2,581 on Feb. 8 and reached an intraday low of 2,532.69 the next day. “Any meaningful close below 2,581, especially if it closes below 2,532, will be quite negative on a very-near-term basis,” Maley said in a research note.
He’s also paying attention to an April low of 2,532.69, the level that’s less than a point away from the Feb. 8 low.
What happens if the S&P 500 dips below there? The next battlefield would be around 2,466, a 38.2 percent Fibonacci retracement of a market rally in early 2016, according to Katie Stockton, founder of Fairlead Strategies LLC.
“Short-term momentum is negative, such that the S&P remains in the grips of a correction,” Stockton said in a note. “A breakdown from the triangle formation does not appear likely but would occur on consecutive weekly closes below 2,533 for increased risk to secondary support near 2,467 per a Fibonacci retracement level.”
To JPMorgan Securities analysts Jason Hunter and Alix Tepper, there is a chance the S&P 500 will bottom around 2,500. But if the rout is bigger than expected, it may find a secondary support level at 2,400. In the short term, key resistance rests at 2590-2600 levels and then the 2,659-2,675 late-March highs, the analysts said in a note Tuesday. Their base-case outlook is that the S&P 500 would see a bullish reversal from the 2,517-2,557 support level.
Last but not least: the 200-day moving average, the level virtually every Wall Street analyst is paying attention to.