The S&P 500 index extended its Q4 uptrend last week, following a short pullback and rally from first support at its 15-day moving average. After a 10% rally from the October lows a near-term pullback should not be a surprise. However, many clients are asking where trading support is and how deep a pullback could develop.
First trading support is between the 15-day moving average (3108), which serves as reasonable proxy for the S&P’s short-term trend, and the recent lows at 3090. Below those levels, which is a 1.5-2% decline, the next support can be found near the summer 2019 highs at 3025. This conveniently lines up with the widely followed rising 50-day moving average for an overall pullback of 4%.
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