Levels to Watch in the SPX

• Posted by Greg Harmon
• on August 24th, 2015

Key levels to watch on the market: Technicians

Tae Kim | @firstadopter

 

As markets are plunging globally, analysts who study charts are eyeing the key levels to monitor.

The theory behind technical analysis is when prices reach previous levels where participants bought and sold in volume, those levels can be areas of support. 

“The market has memory. Historic levels of supply tend to be recognized by market participants in the future when these prices are tested once again,” said J.C. Parets, president of Eagle Bay Capital.

As the market falls, CNBC Pro asked expert technicians where the key support levels are:

 

Above is a free teaser from CNBC Pro, the rest is behind their paywall.  This was my chart and  my comments:

Source: Greg Harmon, StockCharts.com

“Markets are following through to the downside and the technicals look weak, supporting that view of selling off,” wrote Greg Harmon of Dragonfly Capital Management

Harmon’s first level of support for the S&P 500 is 1,885, which is the settle point of the October 2014 low, and his next level is 1,815 from the low in April 2014.

Harmon is looking for a bounce as his key indicators are extremely oversold and the long-term trend is still intact.

“The momentum indicators (Relative Strength Index and Moving Average Convergence Divergence) have turned into the bearish zone. But the S&P 500 is well outside of the Bollinger Bands, so an oversold bounce could happen at anytime,” Harmon said. “The long-term uptrend is not in jeopardy at this point, but certainly the intermediate and short-term trend have shifted to down.”

 

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