A resurgent Covid-19 virus, the upcoming election, and the lack of stimulus have all conspired to put the Dow Jones Industrial Average on pace for its worst weekly drop since March. The question now: How much lower can the stock market go?
When in doubt, we turn to the charts, which can be useful for spotting the next support level. The Dow, for instance, is down 838.66 points, or 3%, to 26,624.53. That’s under support at its Sept. 23 low of 26,763. If the benchmark is able to close above that level today, great. If not, the next support might not come until 25,000, down 6.1% from the current level.
The S&P 500, down 3% at 3288.96, has crashed through support at around 3350, and will be looking to find some near 3200. That’s 2.7% lower than current levels.
It’s a mighty important one, though, technicians say. “The S&P absolutely must in no uncertain terms hold ‘3,200’ to avoid generating a Double Top sell signal which would force me to rethink everything,” writes Evercore ISI’s Rich Ross.
James McDonald, CEO of Hercules Investments, already has. “We believe that if the S&P 500 breaks below 3,200 before the election, its next move may be down another 12% to 2,890,” he writes.
That’s a long way down.
Write to Ben Levisohn at Ben.Levisohn@barrons.com
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October 29, 2020 at 01:46AM
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The Stock Market Is Tanking Here's How Low It Could Go. - Barron's
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