S&P 500: downward correction started? – UBS column

Review: The S&P 500 has risen sharply since its low on October 30th at 3,233 points and was able to climb almost without a break to the high on December 9th at 3,712 points. Downward movements could hardly develop and ended directly at the 10 EMA. But now, with the two lower highs at 3,712 and 3,697 points, a downward trend could be imminent. It should be noted that the S&P 500 only rose to just above the 10-EMA and then ended the upward movement – a bearish signal. Here, downward corrections in the uptrend taper off slightly below the 10-EMA and upward corrections in the downtrend slightly above the 10-EMA. The previous day’s black candle also indicates further weakness.

Outlook: The S&P 500 had been overheating for a long time after the strong ramp-up. The Fear & Greed Index from CNN Money has been quoted in the Extreme Greed area for a long time and thus also warned of prices falling again.

The short scenarios: The S&P 500 has initiated a downward movement with the previous day’s black candle and is likely to drop further below the 10-EMA. The next starting point would then be the area around the 50 EMA at currently around 3,540 points. In this case, the Fibonacci fan in the weekly chart would also be broken down again at 3,640 points. If the bears break through the 50 EMA in the daily chart, a return to the 200 EMA at 3,300 points would be expected. Below the 200 EMA, the situation for the S&P 500 would deteriorate over the long term.

The long scenarios: The bulls can shake off the previous day’s weakness and stay in the 10-EMA area. In this case, a renewed attack on the mark of 3,700 points would be expected, with a breakthrough to the top, the high of 3,712 points is likely to be exceeded.

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With Hans-Werner Sinn, former President of the Ifo Institute: Corona and the miraculous increase in money in Europe
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