As seen in the attached research note the S&P 500 Index tested and reversed off its lowest fibonacci fan trend line on Friday. This intraday reversal level of 1,044 was very close to approaching the support level of 1,037 we had called for several days ago and the reiterated on Thursday. While the S&P 500 remains short-term oversold and could bounce we still believe the index may need to go a touch lower before it finds a better, lasting low.
A close below Friday’s low would open up prices to the next level of support. A zone near the 1,000 to 950 levels.
The silver lining in the sell off is that sentiment remains very low. With sentiment this low it is hard to expect a secular top forming. While anything is possible I have yet to see a major secular top form when sentiment readings are this bearish.
Best.
