S&P 500 : Development of the consolidation phase

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05/15/2019 | 05:02 pm
Buyers take the stairs and sellers take the elevator. In other words, the deterioration of prices is often more violent and faster than their increase. The S&P500 is therefore rejected from its historical highs and dropped by 4% to 2800 points. Admittedly, the consolidation is intended to be brutal, but it comes after 17% of flawless progress.

The main stocks affected by this index decline constitute a significant sample. On the weekly rolling sequence, Symantec dropped 17%, Tripadvisor 14.5% and Intel 12.6%. The tech giants are not immune to the slump, as Apple, which is deteriorating by 7%, as well as Amazon (-6%) and Facebook (-5%).

Graphically, in hourly data, the prices, after doubling the upper line of 2945 points, fell sharply, losing 150 points in a few sessions. The withdrawal movement took place until the 2800 points were supported. At this stage, a buyer consensus is tentatively emerging to allow a short-term rebound in the S&P500.

The extension of this recovery phase can be up to 2850 points or even 2900 points, the price zone of the 20-day moving average. The recovery will be limited anyway. On the other hand, a break in the 2800 points will boost the index in a negative dynamic towards 2740 points.
Patrick Rejaunier
MarketScreener.com 2019
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