Markets are flowing downstream like a fast-moving river, as investors look set to finish an ugly January with even more losses, after that sunshine session on Thursday.
Strategists have been keeping a close eye on some major support levels for the S&P 500 SPX -1.07%, with 1,775 and 1,770 both being batted around as levels to watch. But if stock futures are any indication as to how the day is going to progress, you can kiss those goodbye.
Over at SpreadEx, Max Cohen said the S&P 500 is nearing its 150-day moving average, “a significant technical resistance barrier.
“Currently trading at 1,764.6, the 150-day moving average is still some 33 points away at 1,732.2. Having already smashed through the 20 and the 50-moving day average in the past three weeks, there is nothing to say we won’t go lower. However, with it being earnings season, a string of good company performances could turn the tide.”
Here’s what Sarhan Capital’s Adam Sarhan had to say to clients this week:
“The S&P 500′s next level of support is 1,767-1,772 (Dec. and Jan. lows) then 1,729 (Sept.’s high & its 150 daily-moving average). Meanwhile, the next areas of resistance: 1,776 and then 1,812 (50 daily-moving-average line). Of course, if support is breached — expect much lower prices to follow.”
Here’s T3 Live’s Scott Redler weighing in on Friday morning:
“Starting the year, we had three trends to trade. Sellers were able to break the accelerated trend at SPX 1,813-1,830ish. That was the first spot to reduce risk or change your process. Now the sellers will have their chance to break the intermediate trend at SPX 1,766-1,772 — if that’s your time frame, then you honor that level. A break or close below that level — then the 150-day can come into play in coming weeks at 1,733 and the 200-day under that is 1,705. Know what you can handle.”
It’s a lot of tech talk, but basically strategists are laying out the ground work for a messy Friday, unless things turn around, with a warning from Wal-Mart WMT -1.28%and some ugly numbers from Mattel MAT -10.73% and Amazon.com AMZN -7.81%,
But some see light. J.P. Morgan’s chief U.S. equity strategist, Tom Lee, told CNBC on Friday that 2014 is going to turn into a solid year, and markets are “within a couple of percent of the bottom.”
– Barbara Kollmeyer writes for MarketWatch. Follow her @bkollmeyer