...what would be an area to target
The S&P index is trading at the lowest levels since Aug/September 2017. The low today reached 2462. We currently trade at 2472.
What level would I pick as a bottom for the S&P?
Well looking at the daily chart above, there was a double bottom back in Jan/Feb of 2016 at the 1812.29 level. From there the price trended higher with a volatile correction Feb 2018 and April and May that tested the 200 day MA.
More recently, the price moved below the 100 and 200 day MAs (blue and green lines) and stalled rallies against the 100 day MA before falling out of bed in December.
The index price has moved below the 38.2% at 2509.13. That is of the move up from the 2016 low. More bearish. Stay below that level keeps the sellers in control.
With more selling, I look to the 2376 to 2400 area as a level to target for a bottom. That level is defined by the 50% of the same move up at 2376. The 2400 level is a natural level and also a level that defined highs and low in the first half of 2017. A move down to that area would imply a 18-19% decline from the high. That sounds about right for a bottom and makes sense from a technical perspective.
At 2472 currently, we are 75-100 points from that area. Who knows if we get there? Who knows if we get there, when we get there? It could be sooner than you think.
However, if tested, I know I will be looking to put some money sitting on the sidelines, back in the market for a bounce.
