SPX closes below its opening price unable to hold early session gains
S&P 500 Index (SPX) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
SPX ended Wednesday at 3385.49 losing $15.71 (-0.46%). Trading $17.69 higher after the open, the index was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Tuesday's low at 3389.25, the stock index confirmed its breakout through the previous session low after trading up to $4.80 below it intraday.
Daily Candlestick Chart (SPX as at Sep 16, 2020):
Wednesday's trading range has been $44.47 (1.3%), that's slightly below the last trading month's daily average range of $48.56. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for SPX.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Regardless of a strong opening S&P 500 closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 3361.64 (S1). After spiking up to 3428.92 during the day, the S&P found resistance at the 20-day moving average at 3428.74. After having been unable to move lower than 3389.25 in the previous session, the market found buyers again around the same price level today at 3384.45. The last time this happened on September 1st, SPX gained 1.54% on the following trading day.
While SPX is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Outside Bar" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for S&P 500. Out of 133 times, SPX closed higher 66.17% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.91% with an average market move of 0.36%.
With three of the other Major World Indices closing higher and three closing lower today, the winners of the day are DAX surging 0.29% and DJIA gaining 0.13%. On the flipside the worst performers have been NDX closing -1.67% lower and FTSE losing -0.44%. Read more