SPX breaks below 100-day moving average for the first time since May 22nd


S&P 500 Index (SPX) Technical Analysis Report for Oct 28, 2020 | by Techniquant Editorial Team

Highlights

SPX crashes, losing $119.65 (-3.53%) within a single day
SPX breaks below 100-day moving average for the first time since May 22nd
SPX falls to lowest close since September 24th
SPX dominated by bears dragging the market lower throughout the day
SPX closes lower for the 3rd day in a row

Overview

Moving lower for the 3rd day in a row, SPX ended Wednesday at 3271.03 tanking $119.65 (-3.53%). This is the biggest single-day loss in over a month. Today's close at 3271.03 marks the lowest recorded closing price since September 24th. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.

Daily Candlestick Chart (SPX as at Oct 28, 2020):

Daily technical analysis candlestick chart for S&P 500 Index (SPX) as at Oct 28, 2020

Wednesday's trading range has been $73.59 (2.2%), that's far above the last trading month's daily average range of $44.88. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SPX.

Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.

Prices are trading close to the key technical support level at 3229.10 (S1). The S&P closed below the 100-day moving average at 3306.05 for the first time since May 22nd.

Crossing below the lower Bollinger Band for the first time since March 16th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 3431.57 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 16th, SPX actually gained 6.00% on the following trading day.

Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.

Further selling could move prices lower should the market test September's nearby low at 3209.45.

Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 100" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for S&P 500. Out of 68 times, SPX closed higher 70.59% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 70.59% with an average market move of 0.99%.

With six out of the other six Major World Indices closing lower today, the ones that stand out on the negative side are DAX losing -4.17% and NDX closing -3.93% lower. None of the markets managed to end the day in the green. Read more


Market Conditions for SPX as at Oct 28, 2020

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