Can We Fall Further?
I don’t think this a repeat of the fourth quarter. Growth in the US is solid, and growth around the globe has shown signs of improvement. The Fed is also more dovish, as is the ECB. So the backstop is already in place. Can we fall further? Yes. Potential as far as a zone of 2,850 to 2,830. That would take us back to an unfilled gap, and it could be a likely place to end the decline. It would amount to a drop of about 4%. For now, the index appears to be testing an area of support around 2,863, and it has held and bounced, so we can hope that we have seen lows. But if it falls below there today, be on the watch.
I don’t think we will fall any further. In the next chart, you can see the somewhat robotic nature of the recent S&P 500 rally. It has been in increments of 130 and 170 points for the most part, with a typical pullback of around 2-3%. Interestingly, at the lows around 2,863, it was a 3% decline, and if you add 170 points to today’s low, it takes you to about 3,030.
Also, the sharp decline has left the RSI on the S&P 500 around 45ish. So we went from overbought to neutral quickly. But the good news is that the trend continues to be higher.
VIX
Another positive is that VIX tested resistance yesterday around 20.50 and at least it didn’t close above it.
Technology ETF (XLK)
If you want to find something good out there, the XLK fell to support at $76.25 and for now, has held.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) also continues to hold support at $1900. The trend is still higher.
Facebook (FB)
Facebook (NASDAQ:FB) is heading in the wrong and direction, and support is around $186.
Boeing (BA)
Boeing (NYSE:BA) fell below support at $357, and there are a series of the reasons I think the stock may be heading lower, but $320 seems possible.
Alibaba (BABA)
For now, Alibaba (NYSE:BABA) continues to hold support of around $179. A break below support sends the shares lower to $166.
Micron (MU)
Micron Technology Inc (NASDAQ:MU) is also on the cusp of a significant break down that could send the stock to $36.
