The main U.S. stock market indexes lost 1.4-1.7% yesterday, as investors sold off their stocks in a hurry, fearing that the Fed may reduce its economic stimulus program. The S&P500 index broke down below the recent consolidation lows, clearly defining its downward direction. The yesterday’s gap down at 1,679.61-1,684.83 became very important resistance level, as it suddenly separated us from the July-August consolidation period. On the other hand, the support level is at around 1,635-1,650, marked by some important retracements of the June-August uptrend, as we can see on the daily chart:

Expectations before the opening of today’s session are slightly positive, as the indexes may bounce back a little; the European stock market indexes have been virtually flat. Investors will now wait for further U.S. economic data announcements: Housing Starts, Building Permits and Productivity at 8:30 a.m., and Michigan Sentiment at 10:00 a.m. The S&P500 futures contract (CFD) sold off sharply, going back below the level of support at 1,680. The market is in a clear short-term downtrend. However, a quick rebound scenario cannot be excluded here, with the nearest resistance level at around 1,670-1,680, as the 15-minute chart shows:

Thank you,
Paul Rejczak