The BIG reversal ?
Gary Christie June 11, 2020 10:55 PM
The law of gravity finally hit Wall Street today as the S&P 500 dropped 5.89% and closed back below its 200-day moving average.
The BIG reversal ?
The law of gravity finally hit Wall Street today as the S&P 500 dropped 5.89% and closed back below its 200-day moving average pressured by the Banks (-9.6%), Energy (-9.45%) and Automobiles & Components (-9.26%) sectors. The Dow closed down 1861 points or 6.9%.
Thursday’s trading saw all major U.S. indices confirm an island top reversal pattern after the formation of an exhaustion gap on the 5th of June and a downside breakaway gap that confirmed in today’s trading.
The S&P 500 also confirmed a bearish Belt-Hold Line candlestick. The Japanese name for the belt-hold candle is "Yorikiri" which comes from a sumo wrestling term which means "Pushing your opponent out of the ring while holding onto his belt." Clearly, the S&P 500 got pushed off the top of a cliff in Thursday’s trading.
The S&P 500 has now turned bearish from a technical analysis perspective. A close above the black bearish belt-hold line at 3130 should mean a resumption of the prior uptrend but for now, we look towards bearish price action to close the breakaway gap at the 2863 support level which formed on the 18th of May.
Here is a look at the S&P 500 Index below.
Is it time to short equities? One day of negative price action may be hard to turn bulls into bears but have a look at one of our recent posts that digs a little deeper into some U.S. equities that have had some impressive rebounds. "Short Opportunities Abound as Euphoric US Stocks Take a Tumble"
Source: GAIN Capital, TradingView
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.