SPX 500 nosedive in the new year The stock market has been gunning for all-time highs despite the horrible economic news going around. Based on stimulus hopes and mass euphoria of the market reaching highs, with help from the fed, investors have just been buying at the highs and pushing it higher. However, I think all of that is quickly coming to an end. The market has been pushing higher with no real fundamentals to back it up and there is a lot of negative news looming over these markets. The new Covid-19 strain is quickly spreading throughout the U.S. now so there may be fear of new lockdowns, and Trump signed an executive order for the NYSE to delist some of the biggest Chinese telecom companies in the market. All of this news may trigger some major fears among investors to start taking massive profits and the market will definitely see a huge selloff because of that. Price action also tells the story of the nosedive. As you can see, the S&P has been moving in an ascending channel with a false breakout below on December 21st, which already indicates selling pressure. The market also closed the new year at the zone of resistance formed around 3758 and 3763. The market is showing significant rejection at that level, especially on the 1 hour time frame. You can also see a double top formation and this is further indication of a reversal. Many have been pointing to a glaring bearish RSI divergence forming and they are spot on with that analysis. The market should be seeing a huge correction and if it breaks past the strong support zone around 3641 and 3645 we could see the market bleed all the way to the 3500 levels. I'm currently in a sell position and I'll be targeting 3608. There are a lot of gaps to fill in this market and I believe they will be filled in the coming week.
