The S&P 500 saw one of its worst days of the year Monday, falling 1.7%. The last hour saw a 50-point rally as traders bought the dip, so the day had a much better feel than earlier in the afternoon.
The recent selling has accelerated due to concerns over Evergrande, a large real estate company in China. The company will likely default this week and if they do, we could see some contagion in global markets. While American companies have very little direct exposure, the fear with an event like this is exposure to the exposed.
While the late day rally provided some nice relief, the long-term trend line and 50-day moving average are broken. Traders are now eyeing the important levels where they can buy the dip.
Let’s go over some areas inthe the S&P 500 that you should be eyeing if we get anymore aggressive selling:
Mondays Low– The low printed in the S&P 500 on Monday was 4305. This will be an important spot to hold over the next few sessions
4255 SPX- The 161.8% Fibonacci extension drawn from August lows to September highs is just above the 4250 level in the S&P. If this area holds, we could see a bounce back to the 50-day MA, giving to bulls one last chance to take us to all-time highs in 2021.
4100 SPX-The 200-day moving average currently resides just over the 4100 level and would be the next stop. The 200-day hasn’t been tested since June of 2020, so this is a long time coming. Traders will be anticipating a bounce off this support level.
3650 SPX- Morgan Stanley is calling for a possible 20% correction. If this plays out, the 200-day wouldn’t hold and we would fall to the 3650 area in the S&P.
S&P Futures Trading Levels for Today
The S&P futures currently sit at 4380, about 15 handles off overnight highs.
Support levels for the day will be 4372 and 4351.
Upside resistance is the overnight high at 4396 and 4410.
The current S&P trading environment has been sideways, but is now trending lower after yesterday.
Three Stocks to Watch
AMZN- Amazon tested its 200-day moving average yesterday and bounced aggressively. Losing that $3300 support level would be a negative for stocks and the Nasdaq. Those waiting for a dip, can target $3050.
AAPL- Apple has fallen 15 points off its highs and seems to have its sights set on the 200-day at $134. Investors might want to look at the $136 area, which is the 61.8% retracement level from May lows to recent highs.
UBER– The ride share company is up over 4% after the company guided pre-market. Uber narrowed its Q3 gross bookings outlook to the middle of the expected range. They raised Q3 EBITDA and achieved positive EBITDA in July and August.
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