The selloff in US stocks overnight was a rather bearish development for the near term. S&P 500 gapped below 55 day EMA, and dive through medium term channel support without much hesitation. While it managed to pare back some losses to close at 4357.73, it’s capped below 4367.73 structural support.
The condition for a medium term correction is there with bearish divergence condition in daily MACD. That is, 4545.85 is possibly a medium term top, and fall from there is corrective whole rise from 3233.94 at least. For now, risk will stay on the downside as long as any recovery is capped by 55 day EMA (now at 4415.18). SPX could fall further, for the rest of the year, to 38.2% retracement of 3233.94 to 4545.45 at 4044.70 before finding a bottom.
