S&P 500 Damage Done On Monthly Chart

Today’s equity decline undersay has stunning ramifications for the larger time-frame structure of the S&P 500 and other US Equity Indexes - we’re now at levels not seen since 2003.  Let’s take a quick look at this structure to see where this takes us.

S&P 500 Monthly Chart:

First, let me state that we’ve now officially ‘blown through’ the long-term (large scale) Fibonacci retracements from the 2002 lows to the 2007 highs.  The sellers took out the 61.8% Fibonacci retracement at roughly 1,080 this morning.

Price is undeniably in a monthly downtrend, though the 20 and 50 month EMAs have yet to cross (the 10 and 30 month EMAs have done so - a popular combination used on longer time frame charts).

Where’s the next level of possible support?  I suggest it’s potentially the rising 200 month SMA just under 1,000.  We may get a bounce off current levels, but should price test the longer SMA, a bounce would be in order.

Ultimately, I find it highly conceivable that we retest the 750 - 800 area which  marked the early 2000’s bear market low - it looks clearer than ever now that we’re headed there at some point - but not before a few more counter-trend rallies occur.

This is not an environment for aggression on either side (long or short).  Though it may not seem so, bear markets are much more difficult to trade than bull markets.  Case in point, it took only one year to totally destroy the equity gains that were achieved in five years - let that sink in.

It’s worth noting also that the momentum oscillator registered a new monthly momentum low not seen even during the devastating early 2000’s bear market - don’t overlook this point as well.

Scale your charts back to the larger time frame to see massive technical (price) damage being done across multilpe stocks and sectors - it’s horrific out there for investors and many traders as well.

I’ll keep you informed on new developments and insights across the various markets.

Posted in Categories: Contributor, External Research, Stocks, USA.

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