S&P500: $2 trillion might not be enough

The US stock market falls in the pre-opening, possible reaction of fear to the size of the aid package approved by Congress.
Yesterday the 23% level of the Fibonacci retracement system was conquered, level drilled down now.
Record-breaking market rise scored yesterday, daily gains not seen for almost a century.

Tomas Salles FXStreet

A few hours before the opening of Wall Street, the S&P500 is losing the levels it gained yesterday. This market is highly emotional, as demonstrated by the intraday volatility.

Yesterday's strong bullish rebound reached the 23.6% Fibonacci retracement level from historical highs for the S&P500. In the hours leading up to the opening, and despite the $2 trillion plan approved by Congress, the markets are losing levels and falling back with some intensity.

The MACD and DMS indicators in the daily range show that there is no bullish setup for the moment, but rather that yesterday was important but not sufficient.

On the 1-hour chart, the short and mid-term moving averages are losing their downward profile, while the SMA200 remains in a downward direction.

This setup leads us to expect, in the short-term scenario, an attempt to build a technical floor. This should be a fragile floor though, as long as the higher time frames don't improve its aggressive bearish profiles.

The MACD on the hourly chart shows clear intentions of a downward direction, while the DMS shows the bears trying to regain the lead for today's session.

The current market situation makes it advisable for traders to be cautious in any time frame. Excessive leverage or positions without reliable stop levels can lead to significant losses in either direction.

Author

Tomas Salles

FXStreet

Tomàs Sallés was born in Barcelona in 1972, he is a certified technical analyst after having completing specialized courses in Spain and Switzerland.

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