Prior to its massive 13-day purge, it touched the outer limits (+5 standard deviation) of its long-term uptrending regression channel, as shown on the following 20-year monthly chart.
SPX major support lies another 150 points, or so, below Monday's close, around 2600 (blue line). That level is a convergence of:
- its 50-month moving average (red)
- the -1 standard deviation level of this channel
- the upper edge of the value area (blue line) of a 10-year weekly TPO Profile, as shown on the weekly chart of the S&P 500 E-mini Futures Index (ES), below
- the lower edge of the value area (blue line) of a 2-year daily TPO Profile, as shown on the daily chart of the S&P 500 E-mini Futures Index (ES), below (as more fully discussed in this recent post)
We may see the SPX slide further down to around 2600, or lower, before it begins to stabilize, inasmuch as accelerating downside momentum (rate of change shown with an input value of one period in histogram format) has not yet reached a new 20-year extreme capitulation level, as shown on the following 20-year monthly chart of the SPX.
Keep an eye on the above-referenced levels, together with my recent posts here and here, which describe other gauges that I'm monitoring in the near term for possible clues as to SPX directional moves.
In his Monday evening opening monologue regarding the Chinese coronavirus epidemic, Fox News TV host Tucker Carlson highlighted this rather startling warning that was posted in the official paper of the Chinese Communist Party last week:
"If China retaliates against the United States at this time, in addition to announcing a travel ban on the United States, it will also announce strategic control over medical products, and ban exports to the United States...If China announces that its drugs are for domestic use and bans exports, the United States will fall into the hell of a new coronavirus epidemic."
You can view Tucker's 7-minute monologue in the video below...the aforementioned quote is taken from around the 6-minute mark.
Given that China manufactures most of the antibiotic drugs and many others for U.S. consumption, this is a dire warning, indeed, and is all the more reason for the U.S. to plan for and implement such manufacturing capabilities themselves, sooner rather than later.
I don't think President Trump will be announcing a Phase II trade deal with China anytime soon, with that kind of pejorative, pugnacious, disdainful and downright threatening attitude toward the U.S.
Furthermore, Tucker's interview, that followed, with Dr. Marc Siegel highlights important and developing aspects of the virus, as discussed in the following video.