May 14, 2020
Stocks have indeed fallen off from the big technical resistance levels we talked about a couple of weeks ago.
Here's another look at the chart we've been watching …
The purple line is the 200-day moving average. That is now below 3,000. And for those that follow technical analysis, the big 61.8% retracement of the decline (at 2,931) has indeed proven to be a logical spot for sellers.
As we've discussed, following a sharp 35% bounce from the lows, this technical set up has looked like a sensible place to mark the top of the range, until we get some visibility on what the world looks like with economies reopening.
In the chart, a 10% range would be within the white box. That seems like a pretty fair guess, as to how stocks might trade in the near term (given the higher volatility environment).
So what's the latest on how the economy is progressing on "reopening?"
As of today, 34 states have opened up, the earliest of which were 18 days ago. And despite an increase in the rate of testing, the daily new cases across the country have been steady (at worst), if not declining. So far, so good.