Written by Sinad Karahimetovic
Jonathan Krinsky, chief market technician at BTIG, believes concerns about the long-term effects of the current macro headwinds on markets are justified. Recently, Krinsky warned the company’s clients that the index is about to drop below 3900 after the index completed a head and shoulders pattern.
With the S&P 500 index trading below 3700 in pre-open trading on Monday, “We’re a lot closer to a tradable low than we were at 3900,” Kreinsky says.
“While there will be some talk of a double bottom at the June lows, getting close to the 200-week moving average makes sense for us,” Kreinsky wrote in a note.
Below the 200-WMA, which is approaching 3,590 this week, the next big support for the S&P 500 is around 3,400, or pre-COVID highs. Kreinsky added that the “tradable bottom” may be the result of some metrics showing early evidence of capitulation.
“One metric that lacked capitulation was the NYSE bearish volume as a percentage of total volume. On a 20-day basis, it is now above 60% which is the beginning of the capitulation threshold.”
Until stocks hit bottom, Kreinsky once again warned that the US dollar needs to “at least pause.”