S&P 500 Still Above 4,500 - Have Stocks Bottomed?
December 6, 2021 (Investorideas.com Newswire) The S&P 500 index broke slightly below the 4,500 mark on Friday, but it bounced from that support level again. Is this a bottoming pattern?
For in-depth technical analysis of various stocks and a recap of today's Stock Trading Alert we encourage you to watch today's video.
The broad stock market index lost 0.84% on Friday following Thursday's advance of 1.4%. On Friday the index fell the lowest since the October 19 and it went below its early September local high of around 4,546 again. Overall, it lost 5.24% from the Nov. 22 record high of 4,743.83. Stocks fluctuate since last week's Wednesday, so is this a bottoming pattern? For now, it looks like a flat correction or a consolidation within a downtrend. This morning the broad stock market is expected to open 0.4% higher and we may see some more short-term consolidation following the recent declines.
The nearest important support level is still at 4,500. On the other hand, the resistance level is at 4,580-4,600, marked by the recent local lows. The S&P 500 remains below its short-term downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
Nasdaq 100 Broke Below the 16,000 Level
Let's take a look at the Nasdaq 100 chart. The technology index remained relatively stronger than the broad stock market recently but on Friday it broke below the support level of 16,000 and it was relatively weaker than the S&P 500 index that day. The tech stocks' gauge fell below the early September local highs, as we can see on the daily chart:
The S&P 500 index slightly extended its downtrend on Friday and it was 5.24% below the November 22 record high. So it is still just a downward correction and not a new bear market. But we may see some more downside. For now, it looks like a consolidation within a downtrend, as there have been no confirmed positive signals so far.
Here's the breakdown:
- The S&P 500 slightly extended its short-term downtrend on Friday.
- A speculative short position is still justified from the risk/reward perspective.
- We are expecting an over 5% correction.
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