Today, the broader-market sell-off continues, seeming to intensify. In October, the S&P 500 Index (SPY) tanked 6.9% in a sell-off triggered by investor concerns over rising interest rates, slowing global economic growth, and the US–China trade war. However, the market recovered somewhat in November after Fed Chairman Jerome Powell’s dovish comments in a speech. US equities rallied sharply after news of a US–China trade truce earlier this month. But markets are headed lower once again as investor worry that the outcome of the US–China negotiations might not be as positive or happen as soon as previously expected.
S&P 500 support levels
On December 6 at 1:50 PM EST, the S&P 500 index was at 2,657, down 1.6% for the day. Similarly, the NASDAQ composite index (QQQ) and Dow Jones Industrial Average (DIA) were down 0.7% and 1.8%, respectively.
The index already tested an important support level near 2,640 earlier today. The index was hovering well below its 200-day SMA (simple moving average), which was at 2,760, confirming the bearish trend. The 40-day setup of the RSI indicator was below the line of equilibrium at 41.6, reflecting weakness in momentum. This weakness is why the S&P 500 index could fall and stay below 2,640.
This violation is likely to attract renewed selling pressure in the market, which could eventually drive the index lower toward the next key support level of 2,490.