S&P 500, Dow Jones Charts – Beware of Steep Decline Even if Worst is Over

SP 500/Dow Jones Technical Highlights:

  • SP 500 recaptured broken Feb ’16 t-line, 200-day
  • Dow Jones retracement similar to early-year price action
  • Next move could be sharp decline even if worst over

With global stocks falling sharply, see how recent events fit into our outlook for the remainder of the year in the Q4 Global HEquities Forecast.

The V-bottom rally has led to the SP 500 not even hesitating upon a retest of the 200-day and February 2016 trend-line. In fact, the gap the other day came above the 200 and price sprinted through the trend-line.

But does this mean the market can keep on chugging higher? Perhaps the sharp rise off the lows is indicative of a market that wants to make good on favorable seasonality trends and end the year on a positive note. However, while this may be the case, there is still the threat of a sharp pullback first, if not worse. We saw it earlier in the year, could very well see it again.

What would ease this notion is if the market were to consolidate or at least pullback somewhat gradually as opposed to nosedive. This would

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