Stock markets seem to be taking a break from the selloff lately, but are these mere pullbacks?
Check out these bearish correction levels on the S&P 500 index.
S&P 500 Index: 4-hour
Ready for another leg lower in the stock markets?
This bearish trend on the S&P 500 index seems to be waiting for more sellers to hop in, as the index is pulling up to the Fibonacci retracement levels.
The 50% Fib is currently being tested as resistance, but a higher pullback to the 61.8% level might be in order.
After all, this area of interest is right smack in line with a short-term falling trend line, the 100 SMA dynamic inflection point, and a former support zone. Confluence, baby!
The 100 SMA is below the 200 SMA to confirm that the selloff is more likely to resume than to reverse, possibly taking the S&P 500 index down to its swing low near 3850.00 again.
Stochastic is already indicating overbought conditions or exhaustion among sellers but has yet to turn lower to signal a pickup in bearish pressure.
A return in risk aversion might be enough to spur another round of declines for U.S. equities, even after the latest retail sales report brought some relief.
At the same time, easing pandemic restrictions in China also put investors back in the mood for riskier holdings for now. But the question is, will it last?
