In the past couple of days we've had some down days, including yesterday which resulted in a 3% drop in the S&P500. The daily percentage drop had not exceeded the 3% line in the recent weeks.
We are at a very important technical point. The 50 day and 200 day moving averages are very important to traders as indicators of resistance or support. And now they have converged at the 900 level, which is also a psychologically significant number.
Yesterday we crossed both moving averages to the downside and closed below 900, while the MACD remained bearish. Today I was looking for some support in the morning, but it was very short-lived and did not produce a significant gain. Movement was in a tight range, but we still closed below the moving averages.
The next few days will be a good indication of the state of the market. If we break the two averages without significant support then we could go a lot lower from here. The next support line may be as low as the 800 levels. If we do see support, I would like to see what happens as we approach 950 again. Resistance seems strong.
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