S&P 500 – Is the S&P 500 Carving out a Bottom?

Two points to consider

• Inverted hammer candlestick Could mean sellers are losing momentum
• However, intraday pricing hints that sellers could come out again in force today

The Standard and Poor’s 500 (S&P 500) has fallen for six trading days in a row. This is the longest losing streak on record since 2012. We are seeing downward pressure starting to ease below the handle at 1,800.00. There is a daily candle, hammer candlestick, forming that could indicate sellers are losing some steam. This could also hint at indecision as traders are hesitating from taking this index any lower. This could mean a move higher is in the cards but will have to wait and see as there is considerable event risk on today’s horizon. More on that below.

One important fact to consider in this analysis. The candlestick formation could just be a brief pause before another push lower. We need to wait on confirmation, with a daily close higher to even thing the S&P is hunting for a bottom. There are price dynamics to consider here. Yesterday, prices soared higher after China’s gave in and Beijing introduced a nice round of economic and monetary stimulus to support their flagging economic growth and failing equity indexes. This optimism then lost traction by the end of the trading day with the S&P 500 closing in the negative. The fact the index could not rally on rally on good news is a signal of a more deeply routed underlying weakness. The weakness is very fundamental which warns of upcoming losses in the days ahead.

Upcoming Event Risk

12:30 GMT: US Durable goods orders (July) expected -0.4 percent

12:30 GMT: US GDP Q2 (Annual) expected 3.2 percent

August 28

0545 GMT: Swiss GDP (Quarterly) (Q2) expected -0.1 percent

0545 GMT: UK GDP (Quarterly) (Q2) expected 0.7 percent

1230 GMT: US Core PCE (July annual) expected 1.3 percent