(NEW YORK)–As coironavirus sends stocks falling deeper into bear market territory chart support may indicate a possible short-term bottom, according to Ludlow Research.
Trying to call a bottom in any market crash is hard for even the most skilled professional on Wall Street, and calling one during a unique health emergency such as coronavirus is even harder.
What a final bottom could be remains to be seen on how far and wide this virus spreads in US, and the final effects on economy as things continue to shutdown in unprecedented levels.
S&P 500 Weekly Chart 200-Day Support
As you can see on the weekly chart of S&P 500 the market may find short-term support at the weekly 200-day moving average. We are not saying this could be THE final bottom, but rather we could see a short-term rally based on these few technical issues.
200-day Support: On weekly chart S&P 500 may find support for strong bounce off its weekly 200-day moving average around 2640.
RSI Oversold: On weekly chart S&P 500 may also find support as RSI approaches 30, which in past as indicated short-term ‘oversold’ bottoms in past sell offs.
Computer Buy Programs: More and more of trading is done using algorithms, and with these key indicators about to be triggered you could see a short term bounce in market that may last one to two weeks at these levels.
Again, making calls of final bottoms are hard for even the smartest traders on Wall Street, but with market now entering 25% down from recent highs, and chart approaching key weekly support triggers, Ludlow Research is making call we could see a short-term bottom on S&P 500 around 2640.
Final Bottom Still to be Determined
Longer-term we could still have more downside from these levels as this health emergency becomes more clearer in the coming weeks. This call is focused more for the short-term trader who look for key indicators to play short-term bounce back rallies.
Long Term Investors
For longer-term investors these prices could look really attractive, but also fear on when and where to finally jump in to take advantage of lower prices. The best advice for investors who are looking to buy in for the next 2 to 5 years is to average in at these levels. Don’t jump in fully, but rather split your available cash into 2 to 3 tranches and slowly step in with a starter position and as market falls further you add more from there, or add in on any final rally off bottom.
Look for quality plays, and if this is something you are not experienced in you can buy diversified funds in such sector as technology to gain ownership in wide-basket of quality names, or just purchase the QQQ, which reflects ownership in such stocks as Microsoft, Apple, Google, and Intel all in one stock.
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Ludlow Research is a New York based equity research firm that focuses on providing research coverage and investor awareness services to emerging small-cap companies. For over 12 years we have worked to provide our readers with a simple way of evaluating the current and potential value of small-cap companies. For more information please visit www.ludlowresearch.com
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