US stocks heading for biggest weekly drop on record
The E-mini S&P 500 has collapsed again this week after failing to hold on to 200-day moving average support at 2770/65. The index dropped another 100 points to the next target of 2678/75. If we close the week where we are trading now (2675) we’ll be looking at the largest weekly point drop for the index on record.
An important level on the longer-term charts is 2678/75. Therefore holding below here is negative for today, targeting 2660/59 and 2653/52. We then meet quite important eight-month trendline support at 2647/43.
There is a good chance of a low for the day here. Long positions need stops below 2637. Further losses test strong three-year trendline support at 2625/23. Long positions here would need stops below 2614. Further losses risk a re-test of the May low at 2593/91 with 100-week moving average support at 2580/75.
After a near-300-point drop I am looking for reasons to buy in the longer-term bull trend. Bulls must hold the index above the important 2678/75 level if they are to build a recovery, initially targeting resistance at 2691/93. A move above 2700 allows a recovery to 2711/13, then strong resistance at 2719/21 today. If we break higher look for 2732/34.
Focus on the Dow
The E-mini Dow Jones bottomed just 11 ticks above the lower target of 24500/490. The outlook is negative and further losses target 24445 and 24320/300, with important support from here down to 24200.
This is the best chance of a low for the correction. We are in a longer-term bull trend and this will eventually resume. Try long positions with stops below 24000. A break and weekly close below 24000 would be an important sell signal and risk another 1000-point drop.
Gains are likely to be limited today but a move above 24750/800 targets 24900 and resistance at 25100/150. Short positions need stops above 25200 for a further recovery to 25320/330, then resistance at 25450/500. Shorts here need stops above 25560.
Technical Analyst & Trader
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