Has the seven week Relief Rally morphed into a Sucker’s Rally? I hope so. I’ve been waiting for another buying opportunity.
Today the S&P 500 was down 1.75%, not as bad as yesterday’s 2.05%; and unlike yesterday’s horrible close, today the index improved during the final minutes of trade.
But things don’t look good. Over the past three weeks the S&P 500 has been unable to retrace the April high, nor has it been able to get closer than 2% of its 200dma. Today it also broke below its 20dma.
If the S&P 500 doesn’t find support at its 50dma (~2700) then it’s likely to drop to at least 2600. At that point, it would even be probable that it could drop down to test the March 23 low (~2200).
For long term investors, a drop to or below the 50dma would present an excellent buying opportunity. As always, the exact bottom will be elusive and fruitless to try to pinpoint.