Thursday's Market Minute: Will Bulls Double-Dip?

U.S. equity markets continue to slip this week, as the S&P 500 futures contract is now off more than 10% from its intraday highs of 3580 in early September. This most recent leg down is the first time in months that the “Buy The Dip” approach to markets has failed, so it will be interesting to see whether bulls double-down heading into the weekend.

Examining technical indicators, the /ES had yet another misstep yesterday as it closed below the 64-Day Exponential Moving Average, while the Average Directional Index has been rising from a trough since Friday, suggesting that the current downward trend may be strengthening. However, the market also sits near the confluence of two important technical points that could bolster prices.

The yearly Volume Profile Point of Control, which represents the price level at which the most trades took place, is at 3200; meanwhile, the yearly Linear Regression Line, used to estimate fair value, is at 3195. Watch for a support zone near this area. If bears manage to tip the scales at this point, further support could be found at the confluence of the 252-Day Exponential Moving Average and 200-Day Simple Moving Average near 3075.

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