Within 100 points of 200 week MA
The S&P index trades to a new low at 2740.35. That has taken the price to within a shade over 100 points from its 200 week MA. The last time time price reached to that level was during the last week of 2018 when the market was in the midst of the run lower that saw the price go down -20.21%.
The run down has taken the pair down about -19.5% from the high. A correction is defined by a 10% decline. A bear market is defined by a 20% decline. The fall in December 2008 escaped the bear market after the price rebounded sharply after falling -20.21% intraday.
There probably will be dip buyers against the 20% down level (getting to -19.5 may be it. I don't know). In addition, there may be some intervention from the central banks if things get to that level.
However, should there be a break, a move toward that rising 200 day moving average will be the target. We will see what that level does to "markets" willingness to buy.
Now....the big unknowns/risks remain in the market. They include:
- Central banks response
- Government response
- OPEC and OPEC+
- Coronavirus
Improvement or action in each can help the market.
Things could get worse as well - especially if the coronavirus plays out in an uglier manner which is still possible.
A fourth unknown/risk is liquidity risk. Does the liquidity hold up if some big players who have ignored the risks or been blindsided by the risks cry "uncle", and the bids disappear? Can the calm be kept?
