Last week, world markets tumbled, as worries over China finally pushed investors to exit in panic! The Dow was down over a whopping 1000 points (-1017.65 to be exact); SPX fell 120.65 points; Nasdaq tumbled 341.85 points.
US markets were holding up well on Monday and Tuesday. But, starting on Wednesday, things started to slide. Thursday and Friday were marked by heavy selling. Tonight, at the time of this writing, Asian markets were down big again! China was down 8.45%; Hong Kong fell 4.64%; Japan lost 3.65%.
Gold traded higher for the week, closing near $1160/ounce. Oil tumbled and WTI traded below $40/barrel.
Let's take a look at China's Shanghai Composite Index:
The above is SSEC's monthly chart, from December 2003 until now. As you can see, in April 2006, SSEC had its first "super jump". In just 16 months, that bull market reached its peak. In just one year after its peak, SSEC basically came all the way back, but, not quite. This time, SSEC starting moving higher in August 2014. In ten months, it reached its peak, in June 2015. In just two months after reaching the peak, SSEC has already fallen more than half way! Assuming the history repeats itself and that SSEC falls "almost" all the way back to where it started, we could be looking at somewhere between 2700 and 2400 before this correction ends. But, the way that it is falling, we could see 2700 before the end of this year!
Now, let's take a look at the US markets:
On Friday SPX fell 64.84 points to close at 1970.89. It daily MAs and MACD dropped sharply. If SPX also continues to drop without a pause, we could quickly see 1900!
Nasdaq tumbled 171.45 points to close at 4706.04. Its daily MAs and MACD also nosedove. Nasdaq's first support is at 4600. But, if SPX were to fall to 1900, I think Nasdaq should be around 4400 or below.
For the new week, with that much weakness globally, I think the US markets will open on the downside. But, technically speaking, we are already oversold. So, we should see some bounces late Monday, or perhaps on Tuesday.
As a resistance, we could see a range between 2000 and 2050 for SPX.
FAS fell fast in just two days! It is already testing the support at $29. If $29 does not hold, the next support is between $28 and $27. Big banks (GS, WFC, JPM, and BAC) all look oversold. Both V and MA broke down, finally.
BTK's next support is around 3600. GILD and CELG look oversold. AMGN and BIIB could have more to go. BMRN, INCY, CLVS, BLUE could go much lower.
IGV also fell far in two days. Next support is at $94, and then $90. Even with great earnings, CRM was unable to rise. ADSK reports on Thursday. INTU too a huge fall after earnings. I think it will fall more next week. RHT also has room to fall.
Well, although I drew the support lines here, if the broader market does not get a stop, internets may fall faster from here. GOOG/GOOGL, AMZN, and NFLX are all still holding up. FB is a bit oversold.
Good night and HappyTrading! ™