Trigger to the March panic

The market has been really doing a great job to fight back in the past week. As I have explained in the last week's blog, "Right now, S&P is right above its 50 and 200 DMA (two pinned together), which should be a strong support. So likely it will try to bounce back from that level around 2975ish. How high will it rebound? Likely towards 3100 to 3150 area if a strong bounce."  Well, today's strong opening has just done that: it pushed the index above 3150, but just for a few hours. By end of the day, it closed well below 3150. So far, I have no reason to stay away from my belief: "But don't be fooled by even the seemingly strong bounce as its next leg down could be more powerful and severe. Watch its 50/200 DMA carefully! If they cannot be held and pierced through, it will become ugly very quickly!!" 

Let's me share with you another guru's technical view on the current status of the market that was posted this week. 

Per Market Watch

No doubt, stocks will be watching, which brings us to our call of the day, which discusses what could drive some big highs and lows for the S&P 500 SPX, +0.50% in weeks to come.

"As we look ahead, the biggest risk to markets is the return of panic, as we saw into the March 23 bottom where money was simply trying to get out. The only way panic at that magnitude returns is if the % positive number of cases continues to trend higher off the lows, which is very possible into the fall," writes Adam Kobeissi, founder and editor in chief of the Kobeissi Letter, an investment newsletter.

Kobeissi said that percentage of U.S. cases is currently hovering at 6%, from a low of 4.5%, according to Johns Hopkins University. If that figure starts inching higher, he expects the S&P will start to pull back. Note, U.S. cases topped 50,000 for the first time on Wednesday.

Over the short-to-medium term, he said the path of least resistance for stocks appears to be higher, with the technical picture suggesting a move to 3,150, which marks the high from June 15 to June 23, and a break above that would send the index to 3,275.

But from there, the index could pull back to a low of around 3,000 that was seen this week, partly due to simmering COVID-19 concerns. "It is important to note that 'higher lows' have formed SIX times since March 23, and the 2965-3000 support range marks the last two 'higher lows.' A break below 2,965 opens for significant downside, and we would expect to see 2,730 within a few trading sessions," Kobeissi said.